The U.S. Treasury had invited Chinese officials, including President Xi Jinping's top economic adviser, to attend talks in Washington this week. While Chinese equities had been outperforming other emerging markets during the first half of the year, they have now slid lower and are now well below other emerging markets.
The Trump administration has demanded that China cut its $375 billion trade surplus with the United States, end policies aimed at acquiring USA technologies and intellectual property and roll back high-tech industrial subsidies.
Collection of tariffs on the long-anticipated list will start on September 24, but the rate will increase to 25 per cent by the end of this year. Trump urged Chinese leaders to "take swift action to end their country's unfair trade practices".
USA businesses - which have warned that tariffs could hurt profits, force job cuts, and, in some cases, destroy companies, said the taxes were going to hurt the United States more than the administration realized.
"But, so far, China has been unwilling to change its practices", he said.
In a further attempt to cushion the blow, Washington canceled plans to put tariffs on about 300 product categories, including hot consumer items like smart watches and Bluetooth-enabled devices, chemicals for manufacturing, agriculture and textiles, as well as bicycle helmets, and children's high chairs, auto seats and play pens.
The new round of tariffs on good ranging from electronics, seafood and housewares, according to the White House statement. Informal communications are still going on, administration officials have said, but no formal talks are scheduled.
Trump continues to ratchet up pressure on Beijing to change its trade practices even as he floats the idea of talks.
UPDATE: President Trump has announced tariffs on another $US200 billion of Chinese goods.More news: Race to rescue people stranded in United States hurricane
"Our concern with these tariffs is that the USA will be hardest hit, and that will result in lower United States growth and competitiveness and higher prices for U.S. consumers", Apple said in a letter. U.S. manufacturers are having to pay more for parts and equipment, thereby putting them at a competitive disadvantage to foreign rivals.
The decision throws into doubt efforts to reach a diplomatic breakthrough in the conflict.
Despite the changes, the new tariffs still will cover about US$200 billion worth of additional Chinese goods, as part of an intensifying trade dispute between the world's two largest economies.
The administration earlier this month floated the idea of talks led by Mnuchin, with Liu expected to lead the Beijing delegation.
Trump said his administration is taking this action as a result of the Section 301 process that the USTR has been pursuing for more than 12 months. In retaliating, China in July announced tariffs on American agricultural goods and autos.
Chinese imports from the United States grew by nearly 500 percent over the past five years, such that as of 2017 Chinese buyers accounted for almost one in every five dollars in USA export revenue.
The latest tariffs, along with previous rounds on $50 billion of Chinese goods and metal imports, will mean over half of all Chinese goods coming into the United States are subject to the duties.
The administration and Beijing have already imposed import taxes on $50 billion worth of each other's products. Beijing counterpunched. It imposed a tax of up to 105 percent on U.S. chicken feet - a throwaway item in the United States that's considered a delicacy in China.
"We have to be tougher on spending", White House economic adviser Larry Kudlow said in remarks to the Economic Club of NY, adding that government spending was the reason for the wider budget deficits, not the Republican-led tax cuts activated this year.