Further escalating the ongoing trade war with China, US President Donald Trump on Tuesday threatened to impose tariffs on an additional $200 billion worth of Chinese goods.
The White House said on Monday evening that if China goes through with its promise to retaliate against the US tariffs announced last week, Washington will impose new tariffs.
In a statement, Trump said he had US Trade Representative Robert E. Lighthizer, to draw up a list of $200 billion in Chinese products that will be hit with tariffs of 10 per cent if China refuses his demands to narrow the yawning American trade deficit and change its industrial policies.
The Chinese Commerce Ministry reacted quickly to Trump's announcement, calling it "blackmail" and accused the US of "extreme pressure and extortionist behaviour". It warned it would "strike back hard".
"If the US loses its senses and publishes a new list, China will be forced to take comprehensive measures that are both strong in quantity and gravity and will fight back," it read on Tuesday.
The vow of retaliation was reiterated by Chinese Foreign Ministry spokesman Geng Shuang. "We don't want a trade war, yet we are not afraid of a trade war," he said.
The escalating conflict between the world's two largest economies has rattled markets and companies, which fear disruption to their global supply chains. Stock markets in Asia fell sharply on Tuesday, with Shanghai faring the worst, down 3.8 per cent. European markets also suffered, trading more than 1 per cent lower.
Trump insists that China has been unfairly benefiting from a trade imbalance with the US for years.
The tariffs, which the US government said were punishment for intellectual property theft, will be enacted in two waves. More than 800 exports, about $34 billion worth, will be subject to tariffs starting July 6.
Another 280 or so still need to undergo a public comment period, and will take effect later, CNN reported.
"Further action must be taken to encourage China to change its unfair practices, open its market to US goods, and accept a more balanced trade relationship with the United States," Trump said.
The Trump administration on June 15 said that it will impose a 25 per cent tariff on $50 billion of Chinese exports. China, claiming the US had "launched a trade war", retaliated immediately, outlining its own tariffs on US goods worth $50 billion, including agricultural goods, cars and marine products.
However, none of the tariffs announced by the US on Monday will take effect until industries and consumers have a chance to make their views known in a 60-day public comment period.
The tariffs if implemented would dramatically expand the goods facing trade measures to a range of consumer items, forcing Americans to pay more for smartphones, computers, toys, and televisions among other products.