The White House has also threatened other major United States trading partners like the European Union, Canada, and Mexico with tariffs, hoping that they will eventually be forced to come to the negotiation table.
The Trump administration is proposing raising planned taxes on $200 billion worth of Chinese imports to 25 per cent from 10 per cent, turning up the pressure on Beijing in a trade war between the world's two biggest economies. Administration officials are exploring an additional $200 billion of goods on which tariffs might be imposed.
China said on Wednesday that "blackmail" would not work and that it would hit back if the United States takes further steps hindering trade, including applying the higher tariff rate.
In its statement, however, the Chinese Commerce Ministry said China can achieve "high-quality" economic growth despite the toll exacted by tariffs: "China always holds on to the belief that bad things can be turned into good things".
"US pressure and blackmail won't have an effect", Chinese Foreign Ministry spokesman Geng Shuang told a regular news briefing. "But dialogue must be based on mutual respect, equality, rules and credibility", said Geng. "Second, we suggest the USA return to rationality and not act impulsively, as it will eventually hurt itself".
Wednesday's tariff announcement is all the more significant because it follows an agreement between President Trump and European Commission chief Jean-Claude Juncker to negotiate a resolution of trade differences between the U.S. and EU.
The USTR said it will extend a public comment period for the $200 billion list to September 5 from August 30 due to the possible tariff rate rise.
White House press secretary Sarah Huckabee Sanders told reporters Friday that "instead of retaliating, China should address longstanding concerns about its unfair trading practices".
Shanghai -1.8% to 2,824, while the Dow fluctuates between gains and losses. The yuan fell against a tradeweighted basket of currencies to a level that's near the lowest on record, suggesting policymakers are allowing further weakness.
Officials have cautioned that a specific timetable, the issues to be discussed and the format for talks aren't finalised, but added there was agreement among the principals that more discussions need to take place. China immediately vowed to retaliate though at the same time urged the USA to act rationally and return to talks to resolve the dispute.
Trump has ultimately threatened tariffs on over $500 billion in Chinese goods, covering virtually all USA imports from China.
That fell apart shortly after it was announced by US officials and amid acrimony in the negotiating team sent to Beijing due to disagreements over the concessions that would be made to China.
China has been quick to retaliate against most U.S. tariff actions, although the Ministry of Commerce is yet to respond to Wednesday's announcement.