At a press conference, Chinese foreign ministry spokesperson Hua Chunying said despite the US' increasing number of tariffs, China "has the confidence, the abilities and the conditions to realise steady and sound economic growth" to withstand the trade war.
Kudlow said China could end USA tariffs "this afternoon" if it took measures that include cutting tariff and non-tariff barriers to imports.
Hua Chunying said the USA policies will not resolve the trade dispute.
Trump considers the EU's 10 percent tariff on cars to be unfair compared to the US 2.5 percent tariff, although the United States maintains a 25 percent tariff on pickup trucks.
In a televised interview on Wednesday, Kudlow blamed China for an impasse in trade negotiations, which began in response to the Trump administration's policy of unilaterally imposing tariffs to pressure China.
The economy was spurred by Trump's regulation cuts and tax cuts and the expected GDP growth around 3 percent this year "may be the beginning of the recovery", Kudlow said.
While Beijing described those latest threats as "totally unacceptable", Trump administration officials continued to demand China reform its hardline trade negotiating tactics and curtail the theft of American technology and intellectual property, a major campaign pledge of President Trump.
Kudlow said the ball is now in China's court but noted that President Xi Jinping is not ready to compromise and is "holding up the game". China's Xi has the power to stop the tit for tat trade war, but is not willing to do so. "We don't want to be with the tariffs", he added, saying they could hurt USA companies' ability to compete around the world.
While some investors had hoped Kudlow might use the occasion to dial back some of Trump's rhetoric and calm Wall Street's nerves, he backed his boss fully. Europe, Canada, even our sources in China say that even the Chinese government knows that they are doing is wrong.
European Commission President Jean-Claude Juncker is due to meet with Trump in Washington July 25 and "I'm told he's bringing a very important free trade offer ... that could lower barriers", Kudlow said. "We are waiting for him (Xi)".
The trade negotiations between the United States and China aimed at defusing tensions have stalled, said Kudlow.