The United States is preparing to target more than $1 billion in Chinese products for possible trade sanctions because the Chinese are refusing to halt the theft of American computer software, movies and tapes, U.S. sources said Friday.

The action threatens to spark a trade war with one of America's major trading partners because the Chinese have threatened to retaliate with sanctions of their own against U.S. products.The formal announcement will be made by U.S. Trade Representative Mickey Kantor on Saturday, according to sources close to the talks, who talked on condition of anonymity.

Sen. Orrin Hatch, R-Utah, wrote Kantor earlier this month fearing that China's withdrawal of its GATT (General Agreement on Tariffs and Trade) application for membership could encourage more pirating.

"In my judgment, the Chinese recognized they could not comply with GATT's intellectual property protection standards, and they would not meet the demands of U.S. negotiators who were in Beijing this fall to avert a trade showdown," Hatch said.

According to Hatch's office, China could face more than $3 billion in market sanctions through increased tariffs on U.S. imports such as textiles, apparel, electronics and toys.

From this preliminary list, U.S. officials will select the final list of products that will be subject to punitive tariffs of up to 100 percent.

The actual sanctions will not go into effect until some time after a 30-day comment period in which American importers will be given the chance to argue that sanctions in particular areas would cause extensive harm to American businesses and consumers.

If history is a guide, both sides could find a way to resolve the dispute over the next month.

However, Chinese officials have repeatedly defended the efforts they have already made to protect U.S. intellectual property and said the threat of American sanctions will not force them to do more.