China's Ministry of Commerce has called the move "blackmail", warning, "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".
Security guards walk in front of containers at the Yangshan Deep Water Port in Shanghai, China on April 24, 2018.
US President Donald Trump threatened on Monday to impose a 10% tariff on US$200 billion (RM799 billion) of Chinese goods, saying the move was in retaliation for China's decision to raise tariffs on US$50 billion (RM199 billion) in US goods.
China's commerce ministry condemned the announcement, saying the United States was engaging in a "practice of extreme pressure and blackmail".
The Trump tariffs, which the United States government says are punishment for intellectual property theft, will be enacted in two waves.
These include major American exports to China such as soybeans, which brought in $14 billion in sales past year and are grown in states that supported Trump during the 2016 presidential election.
The US leader warned that after the new measures are in place - on top of existing 25 per cent tariffs on US$50 billion in Chinese imports - tariffs on another US$200 billion of Chinese goods would go forward "if China increases its tariffs yet again".
Earlier on Monday, stock markets fell amid fears of further deterioration of US-China trade relations. To understand the effects of tariffs, look no further than washing machines and solar panels.
But Beijing faces challenges in retaliating directly: China ships far more goods to the United States ($505 billion previous year, according to U.S. figures) than come back in the opposite direction ($130 billion).
In a statement published shortly after Monday's announcement, China's Ministry of Commerce called the move "blackmail". That would encompass roughly 90 percent of the $505 billion worth of goods that China exported to the United States in 2017. "However, confronted by such short-sighted act that hurts both United States itself and others, China has no choice but to fight back forcefully".
"Although many think this might be another bluff from Trump, markets are likely to stay nervous to trade-related headlines for now".
USA lawmakers are trying to block Trump's deal with ZTE.
Trade-sensitive companies like Boeing Co. and Caterpillar Inc., China-exposed stocks like Acacia Communications Inc. and NXP Semiconductors, and steel producers and metals companies like Alcoa Corp. and United States Steel Corp. are among the hardest hit in NY trading, while the Dow Jones Transportation Average is down 1.9 per cent, the most since May 3.
To respond to Trump's threat to impose tariffs on as much as $250 billion worth of Chinese goods, Beijing would have to find other ways to respond.
The United States and China have the world's biggest trading relationship but official ties are increasingly strained over complaints Beijing's technology development tactics hurt American companies.
Rather than looking weak with a veto, Trump's threat of dramatically escalating tariffs is a show of strength that has scared investors and may also scare Republican senators into backing down. The White House has said it opposes the ZTE provision, but a Trump veto of a defense bill to save Chinese jobs would be awkward.