The news threw US-China trade war worries back into the spotlight just days after Washington imposed 25 per cent tariffs on $34 billion of Chinese imports, and Beijing responded immediately with matching tariffs on the same amount of US exports to China. But Trump hasn't backed down, arguing that China's unfair trading practices are hurting American workers.
A senior administration official told Fox News that China has been "non-responsive" to US actions and has insisted that Beijing does not see any way America has been hurt by Chinese policies.
Proposed tariffs on another US$200 billion of Chinese imports have been rolled out with Beijing vowing to retaliate.
World stocks fell and the dollar rose Wednesday after Washington threatened to hammer Beijing with tariffs on a further $200 billion of Chinese imports, ratcheting up the global trade war.
Analysts say the Chinese government could target trade in services between the two countries, such as tourism and education, or seek to make life hard for big American companies operating in China.
USA trade representative Robert Lighthizer announced that the U.S. was acting because China had not heeded previous warnings. It's an extensive list of over 6,000 goods that include seafood, propane and toilet paper, among many other things.
Overnight, Donald Trump began the process of slapping 10% tariffs on a further $200bn of imports from China, on top of the $34bn (soon to be $50bn) imposed last week.
But China also faces difficulties in retaliating directly: it ships far more goods to the United States ($506 billion past year, according to USA figures) than come back in the opposite direction ($130 billion). "This new round of proposed tariffs takes the fight onto yet another level from which it is going to be hard for either side to make a graceful retreat", said Eswar Prasad, former head of the International Monteary Fund's China division.
The additional US tariffs, which will go through a two-month approval process including a public hearing, come after China retaliated in a tit-for-tat trade skirmish last week.
Rajiv Biswas said "For China, the United States is its largest export market, accounting for 19% of total Chinese exports".
America's trade war with China is back on.
The USTR, the federal agency that oversees worldwide trade policy and negotiations, said it was responding to Beijing's decision to retaliate instead of changing its policies.
Beijing's lopsided trade balance with the United States means it will quickly run out of imports for retaliation.
Although the trade war obviously remains front and centre in the minds of investors, another factor at play is the nagging worry that Trump may want to pull the US out of NATO (the North Atlantic Treaty Organisation) - a move that would represent a fundamental upheaval in the global order, and have a huge impact on markets.
The move drew immediate condemnation from Senate Finance Chairman Orrin Hatch, a Republican from Utah, who called it "reckless" and not "targeted".