US President Donald Trump has threatened to impose tariffs on an additional $200bn (£151bn) of Chinese goods in a growing trade row.
Mr Trump said the 10% tariffs would come into effect if China “refuses to change its practices”.
The move would be a major escalation of the dispute. World stock markets have suffered sharp falls as a result.
China responded by accusing the US of “blackmail”, raising fears of a full-blown trade war.
Its commerce ministry said the country would take “qualitative” and “quantitative” measures and “fight back firmly” against additional tariff measures by the US government.
Mr Trump insists that China has been unfairly benefiting from a trade imbalance with the US for years.
During the 2016 election campaign, he promised to use tariffs to cut the US trade deficits.
But many economists have warned that tariffs are likely to make products more expensive for US consumers and hurt some of the businesses the administration is trying to protect, which depend on China for parts or assembly.
Asian markets sank on Tuesday in response to the latest news, with Shanghai’s Composite Index finishing the day down 3.8%. European markets also opened lower, with most indexes down by about 1%.
How did the latest spat unfold?
Last week, Mr Trump confirmed that the US would impose 25% tariffs on $50bn worth of Chinese goods.
Beijing responded by saying it would hit 659 US products worth $50bn – including agricultural products, cars and marine products – with a similar tax.
Late on Monday, the US president condemned China’s “unfair practices related to the acquisition of American intellectual property and technology”.
He added: “Rather than altering those practices, it is now threatening United States companies, workers, and farmers who have done nothing wrong.”
Mr Trump added that new tariffs would “go into effect if China refuses to change its practices, and also if it insists on going forward with the new tariffs that it has recently announced”.
“If China increases its tariffs yet again, we will meet that action by pursuing additional tariffs on another $200bn of goods.”
China’s commerce ministry reacted swiftly, saying: “If the US acts irrationally and issues a list, China will have no choice but to take comprehensive measures of a corresponding number and quality and take strong, powerful countermeasures.”
Source : BBC