China's envoy to the trade talks, Vice Premier Liu He said before leaving Washington that Beijing would not compromise on matters of principle and that tariffs on Chinese exports to the USA should be lifted as a condition for striking a deal.
The S&P 500 on Friday racked up its worst weekly decline since December, as Washington raised tariffs on Chinese goods worth $200 billion to 25 per cent from 10 per cent.
The U.S.is awaiting retaliation from China over increased tariffs, after talks in Washington ended without a deal on trade, the president's chief economic adviser said on Sunday.
But according to Wei Jianguo, a former vice minister at China's Ministry of Commerce, Trump's latest escalation will be met with a powerful response from Beijing.
China "will never yield to external pressure", he said.
Beijing matched Trump's earlier 25 per cent tariff on $50 billion of American goods.
"We will then spend (match or better) the money that China may no longer be spending with our Great Patriot Farmers (Agriculture), which is a small percentage of total Tariffs received, and distribute the food to starving people in nations around the world!" To do so would be an unacceptable concession for the country that is still sensitive to what it considers years of subjugation from foreign powers until at least the mid part of the last century - a topic that is not only still taught to every Chinese student but which has become part of the Chinese national psyche.
The higher tariffs from the US and China's response that it would take "necessary countermeasures" rattled investors Friday who had been hoping for a quick resolution to the dispute.
"It's clear that there is a lot of nervousness around the US-China trade negotiations and concern that it's really deteriorating pretty significantly, and that's impacting all areas of markets", said Kristina Hooper, chief global market strategist at Invesco in NY.
"The perception that China can not bear it is a fantasy and misjudgment", the commentary said.
The president insisted increases on Chinese goods don't hurt American consumers, saying there is "no reason for the U.S. Consumer to pay the Tariffs".
The move comes after Beijing threatened "necessary countermeasures" for Trump's tariffs on Friday.
And the president has publicly complained about government subsidies that lower Chinese companies' operating costs, along with a sustained effort to devalue the Yuan, tactics that make Chinese products progressively cheaper to buy.
US officials have blamed Beijing for reneging on previous agreements in the midst of lengthy talks toward a resolution of the ongoing trade war.
Forecasters warned Friday's hikes could disrupt a Chinese recovery that appeared to be gaining traction. That would push annual growth below six per cent, raising the risk of politically unsafe job losses.
China's state media tried to reassure businesses and consumers the ruling Communist Party has the resources and policy tools to respond.
"It's no big deal".