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 per cent 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.
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.”
One analyst wondered if performance at the polls may be behind Mr Trump’s latest move.
Ritu Vohora, an investment director at M&G Investments, told the BBC’s Today programme: “There is a lot more at stake here for Trump with the mid-term elections in November.
“China clearly is very much wanting to be this global tech leader so neither side really wants to back down and the real risk here is if Trump continues to push China on systematic changes to its economic model, then that’s quite a significant protracted tension we could see in the markets.
“It seems to be a war of attrition at the moment where neither side is willing to bow down to the pressure.”
What products are affected?
The US tariffs previously announced affect more than 800 Chinese products worth $34bn in annual trade. They are due to come into effect on 6 July.
The product lines range from aircraft tyres to turbines and commercial dishwashers.
In his latest statement, Mr Trump said that he had asked his advisers to identify additional Chinese products on which to impose new tariffs.
The Trump administration says China encourages transfer of intellectual property – design and product ideas – to Chinese companies, through measures such as requiring that foreign firms share ownership with local partners to access the Chinese market.
