China's government has vowed to "counterattack with great strength" if Donald Trump goes ahead with plans to raise US tariffs on an additional 100 billion dollars of Chinese goods.
The US president on Thursday instructed the US trade representative to consider the additional tariffs.
The surprise move came a day after Beijing announced plans to tax 50 billion dollars in American products, including soybeans and small aircraft, in response to a US move to slap tariffs on 50 billion dollars in Chinese imports.
In Beijing, a Commerce Ministry spokesman said China does not want a trade war - but is not afraid to fight one.
"If the US side announces the list of products for 100 billion dollars in tariffs, the Chinese side has fully prepared and will without hesitation counterattack with great strength," spokesman Gao Feng said.
He gave no details of what measures Beijing might take.
— CGTN (@CGTNOfficial) April 6, 2018
Mr Trump's proposal intensified what was already shaping up to be the biggest trade battle since the Second World War.
Global financial markets had fallen sharply as the world's two biggest economies squared off over Beijing's aggressive trade tactics. They calmed down on Wednesday and Thursday on hopes the two would find a diplomatic solution but slid on Friday after Beijing said it would fight the Trump administration's latest threats.
The White House announced after the markets closed on Thursday that Mr Trump had instructed the Office of the United States Trade Representative to consider whether 100 billion dollars of additional tariffs would be appropriate and, if so, to identify which products they should apply to.
He has also instructed his secretary of agriculture "to implement a plan to protect our farmers and agricultural interests".
"China's illicit trade practices - ignored for years by Washington - have destroyed thousands of American factories and millions of American jobs," Mr Trump said in a statement announcing the decision.
The latest escalation comes after the US on Tuesday said it would impose 25% duties on 50 billion dollars of imports from China, and Beijing quickly retaliated by listing 50 billion dollars of products it could hit with its own 25% tariffs.
The Chinese list included soybeans, the biggest US export to China, and aircraft up to 45 tons in weight. Also on the list were American beef, whiskey, passenger vehicles and industrial chemicals.
TRADE TENSIONS: China vows to fight U.S. at “any cost” as President Trump considers $100B in tariffs pic.twitter.com/G5Y40tRMUR— FOX & friends (@foxandfriends) April 6, 2018
Earlier in the week, Beijing announced separate import duties on 3 billion dollars of US goods in response to the Trump administration's duties on all steel and aluminium imports, including from China.
US officials have sought to downplay the threat of a broader trade dispute, saying a negotiated outcome is still possible, but economists warn that the tit-for-tat moves bear the hallmarks of a classic trade rift that could escalate. Already, the tensions have rattled global stock markets.
US trade representative Robert Lighthizer called China's move "unjustified" and said Mr Trump's proposal was an "appropriate response to China's recent threat of new tariffs".
"Such measures would undoubtedly cause further harm to American workers, farmers, and businesses," he said in a statement.
"Under these circumstances, the president is right to ask for additional appropriate action to obtain the elimination of the unfair acts, policies and practices identified in USTR's report."
Antjuan Seawright on China tariffs: "The burden will be passed down to the middle-class working families, especially farmers. These are people who came out in large numbers for @realDonaldTrump. So I think he's going on a very dangerous political path." @IngrahamAngle pic.twitter.com/88DckH0qBK— Fox News (@FoxNews) April 6, 2018
- Press Association & Digital Desk