Earlier today we laid out the various ways in which China can retaliate to today's official start of trade warfare between Washington and Beijing (of which the "trade war heavy" scenario was especially troublesome), and said that at this point all there is to do is watch and wait as China unveils next steps.

It did just that when the Chinese Embassy in the US issued a statement in response to the "Section 301" investigation, in which it said that the US, "ignoring rational voices" has engaged in a "typical unilateral trade protectionist action" which "China is firmly opposes."

The embassy then said that while China "does not want a trade war with anyone", it is "not afraid of and will not recoil from a trade war." Furthermore, Beijing is "confident and capable of facing any challenge."

It then warns Trump that "if a trade war were initiated by the U.S." which it just was a little after noon Eastern, "China would fight to the end to defend its own legitimate interests with all necessary measures."

Ultimately, China warns that "the actions undertaken by the U.S. are self-defeating. They will directly harm the interests of U.S. consumers, companies, and financial markets. They also jeopardize international trade order and world economic stability."

And in a plea that will fall on deaf ears in the White House, Beijing concludes by urging the U.S. "to cease and desist, make cautious decisions, and avoid placing China-U.S. trade relations in danger with the purpose of hurting others that eventually end up hurting itself."

Translation: China will retaliate imminently, at which point - in typical tit-for-tat fashion - the US would respond in kind again, until the worst-case scenario envision by Deutsche Bank emerges.

The silver lining: this trade war will be used by the Fed to first delay and then call of the rate hike cycle entirely, in the process perversely validating Trump's claim that trade wars are, drumroll, bullish.

Full statement below: