Chinese foreign ministry spokesman Geng Shuang hit back, calling it "absurd and utterly unacceptable" to look at bilateral ties "from a clash-of-civilisations or even racist perspective". "We have the confidence and the ability to protect our lawful and legitimate rights", Geng said, responding to a question on Trump's threat of putting duties on all Chinese imports.
There are many other sources of tension ripe for flare-ups: US military aid to self-ruled Taiwan, Chinese territorial claims in the disputed South China Sea, US criticism of Beijing's Belt and Road global infrastructure programme, and US security warnings against Chinese telecom champion Huawei. Regulators have started targeting American companies in China by slowing down customs clearance for shipments and issuance of business licenses. It had been expected that a trade deal would nudge China towards liberalising some of its services markets, particularly financial sector industries.
In particular, goods in the supply chain affected by the trade war, such as computers and parts, integrated circuits and rubber, have already shown a year-on-year contraction of 25.5, 28.8 and 18.2 per cent, |respectively, in the first quarter of this year, he said.
Forecasters warned that Friday's hikes could disrupt a Chinese recovery that appeared to be gaining traction.
What are the implications for the world at large?
He argued, though, that the tariffs would have a "very modest" impact on United States economic growth and said the tariffs have increased customs revenues. "Both sides will pay in these things", Kudlow admitted. That would push annual growth below 6 percent, raising the risk of politically unsafe job losses.
Washington wants Beijing to tighten its intellectual property protections, cut its subsidies to state-owned firms and reduce the yawning trade deficit.
The chief Chinese envoy, Vice Premier Liu He, told state TV the remaining issues had to do with principles and "we will make no concessions on matters of principle". China will never surrender to external pressure. He said: "the Chinese aren't paying".
In recent days, Trump has characterized his tariffs as being paid for largely by China, expressly saying that the economic rival will be the most affected. Shares also fell in Taiwan and Southeast Asia.
Mr. Kudlow acknowledged that Americans will feel the brunt of consequences from the tariffs, in having to pay high taxes on Chinese goods.
Beijing matched Trump's earlier 25% tariff on $50 billion of American goods.
UBS economists said they believed Beijing might raise tariffs on $60 billion of USA goods and cancel an agreement to postpone a duty increase on imported American autos while the two sides negotiated. As a result, they increase costs for importers of the products and can drive up prices for consumers.
Kudlow said there was a "strong possibility" that Trump will meet with Chinese President Xi Jinping at a G20 summit in Japan in late June.
"There is nothing to be afraid of", said the party newspaper People's Daily. How will the latest escalation impact the likelihood of an eventual trade deal? "It is no big deal".