Trade war begins: US-China tariffs kick in, China retaliates

Washington's 25 percent duties went into effect at midnight EDT and affected products such as water boilers, X-ray machine components, airplane tires and various other industrial parts. China immediately implemented retaliatory tariffs on its $34 billion list of goods issued last month, including soybeans, pork and electric vehicles. Beijing called it the "biggest trade war in economic history."

It's unlikely to stop there. In fact, there will be probably be "escalation upon escalation," warned Geoff Raby, Australia's former ambassador to China.

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"I thought that by now a negotiated solution would have been found," Raby told CNBC's Martin Soong, adding that it seems the U.S. has "walked away" from any potential deal.

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"In each skirmish the U.S. targets different economies and consumers, but the retaliation from each counterpart falls on the same group of American consumers and businesses. The reckoning is in the pipeline, in our view," the note said.