Donald Trump has claimed China "played it wrong" after Beijing moved to impose a 34 per cent tariff on all US goods.
China announced it would hit American imports with new tariffs from April 10, in response to the US president introducing sweeping levies for goods from 180 countries this week as part of what he called "liberation day".
Mr Trump reacted to China's tariffs on US goods on his social media platform, Truth Social, after China's foreign ministry said the charges will come in from April 10.
The tariff on Chinese imports to the US is also 34 per cent from April 9, bringing the total rate overall, including previous duties, to 54 per cent.
"China played it wrong, they panicked — the one thing they cannot afford to do!" he posted in capital letters.
The war of words came as British Prime Minister Keir Starmer called Australia's Prime Minister Anthony Albanese and Italy's Prime Minister Giorgia Meloni on Friday, local time, to discuss the unfolding tariff battle.
"They all agreed that an all-out trade war would be extremely damaging and is in nobody's interests, while agreeing to keep in close contact in the coming days," a spokesperson for No 10 Downing Street said.
Beijing's announcement, which came amid continuing market turmoil, included controls on exports of medium and heavy rare-earths to the United States.
The limits come into effect on Friday, local time, and are on samarium, gadolinium, terbium, dysprosium, lutetium, scandium and yttrium.
Gadolinium is commonly used in magnetic resonance imaging and yttrium is used in consumer electronics.
Other materials are used in electric car batteries, as well as manufacturing and defence sectors.
"The purpose of the Chinese government's implementation of export controls on relevant items in accordance with the law is to better safeguard national security and interests, and to fulfil international obligations such as non-proliferation," China's Commerce Ministry said in a statement.
China has also lodged a lawsuit against the US tariffs with the World Trade Organization.
Beijing said the US tariffs were "a typical unilateral bullying practice that endangers the stability of the global economic and trade order."
Earlier, Mr Trump defended his sweeping tariff agenda, posting on his social media platform Truth Social that his policies would "never change".
Additionally, the Chinese government said it has added 27 US firms to lists of companies subject to trade sanctions or export controls.
Among them, 16 are subject to a ban on the export of "dual-use" goods.
The commerce ministry added the companies targeted seriously "undermined" China's national sovereignty, security and development interests.
It said they would be prohibited from new investments, import and export activities in China.
Markets tumble after China tariff announcement
Global stocks have dived following President Trump's tariff announcement, which wiped $US2.4 trillion ($3.9t) off Wall Street equities.
The sell-off has deepened following China's retaliatory tariff move.
US markets opened sharply lower, following the lead of stocks across Europe.
Markets in the UK and Germany closed nearly 5 per cent lower on Friday.
Countries across the world are grappling with how to respond to President Trump's tariffs.
Most have criticised the move while also emphasising the need for negotiations with Washington.
After British Prime Minister Keir Starmer called Anthony Albanese and Italian Prime Minister Giorgia Meloni, a spokesperson for Mr Starmer said the UK would "calmly continue with our preparatory work, rather than rush to retaliate".
"While the global economic landscape has shifted this week, it has been clear for a long time that like-minded countries must maintain strong relationships and dialogue to ensure our mutual security and maintain economic stability," a spokesperson for Mr Starmer said.
Earlier on Friday, Ms Meloni said the 20 per cent tariff on European exports were wrong but "not the catastrophe that some are making it out to be."
European Commission President Ursula von der Leyen said the global trade system had problems but tariffs "will not fix it", before reiterating a desire to negotiate with President Trump.
Asian countries were hit particularly hard by this week's announcement by the US.
Goods from Vietnam will face a 46 per cent levy, which threatens to decimate footwear, electronics, textiles and seafood exports.
Donald Trump said Vietnam's leader To Lam has already reportedly offered to slash tariffs on US goods.
"Just had a very productive call with To Lam, General Secretary of the Communist Party of Vietnam, who told me that Vietnam wants to cut their Tariffs down to ZERO if they are able to make an agreement with the US," he wrote on his Truth Social platform.
"I thanked him on behalf of our country, and said I look forward to a meeting in the near future."
Meanwhile, Japanese Prime Minister Shigeru Ishiba has flagged he's prepared to fly to the US to meet Mr Trump to try and avoid the 26 per cent tariff on goods from his country.
ABC/wires
