"The outburst of large-scale mutual levying of tariffs between China and the United States will inevitably destroy Sino-US trade", Li Chenggang, the assistant minister of commerce, said. China's Commerce Ministry called the new wave of USA tariffs "totally unacceptable" and vowed to protect its core interests.
The office of US Trade Representative Robert Lighthizer has released a list of Chinese products, running to nearly 200 pages, that will potentially be hit with a 10 per cent import tax as early as September.
The Trump administration announced Tuesday that it would impose a 10 percent tariff on $200 billion of Chinese imports, just days after it implemented a 25 percent tariff on $34 billion of Chinese imports.
Head of U.S. equity strategy at JP Morgan, Dubravko Lakos-Bujas, said: "Despite trade headlines, S&P 500 companies should deliver robust earnings on above-trend revenue growth and sharply higher margins".
The Aussie, considered a liquid proxy for China-related trades, fell 0.5 percent against the dollar to US$0.7418.
The US has announced its plans to impose taxes on a further $200 billion worth of Chinese imports, in retaliation for China's retaliation to America's first round of tariffs.
Beijing imposed its tariffs on Friday in retaliation for United States tariffs on Chinese goods.
The U.S. felt it had no choice, but to move forward on the new tariffs after China failed to respond to the administration's concerns over unfair trade practices and Beijing's abuse of American intellectual property, according to two senior officials who spoke to reporters.
"Tonight's announcement appears reckless and is not a targeted approach", said Senate Finance Chair Orrin Hatch in a statement.
The USTR, the federal agency that oversees worldwide trade policy and negotiations, said it was responding to Beijing's decision to retaliate instead of changing its policies.
The news shattered the uneasy calm that had descended on markets and allowed them to regain some of the ground lost in recent months on trade war woes.
The move is a significant escalation of the trade war between Washington and Beijing, further raising the dangers of a major economic shock.
The country's Commerce Ministry earlier threatened "comprehensive measures", which were feared to include harassing American companies in China.