The White House has criticised China after the second largest economic country imposed retaliatory tariffs against the US on a range of goods, including pork, fruits, and wine.
Beijing has introduced duties of up to 25 per cent on 128 American imports following the US President Donald Trump's decision to slap tariffs on steel and aluminium.
China said the move was intended to safeguard its interests and balance losses caused by the new tariffs.
Most of the global stocks fell sharply after the decision. Wall Street, Asian shares including the Japan’s Nikkei, the Shanghai Composite, and the Hang Seng, traded mostly lower.
"Instead of targeting fairly traded US exports, China needs to stop its unfair trading practices which are harming US national security and distorting global markets," spokeswoman Lindsay Walters said.
She said, "China's subsidisation and continued overcapacity is the root cause of the steel crises."
The back-and-forth reflects rising tensions between the first largest economic country of the world and the second largest economic country, which President Trump has described as an "economic enemy".
The US has taken two major steps on tariffs recently that have triggered tension with China, the first on steel and aluminium and the second on intellectual property, reports BBC.
The global steel and aluminium tariffs were announced on 8 March. The US is using national security laws to impose the tariffs, which it says are needed to protect US producers.
Certain allies such as Canada, Mexico and the European Union are in line for exemptions, pending talks.
China has challenged the US use of national security laws and announced retaliatory tariffs on $3.0 billion (£2.1bn) worth of US products.
Those tariffs went into effect on Monday, targeting US goods including frozen pork, nuts, fresh and dried fruit, ginseng and wine.