"But the United States will no longer be taken advantage of on trade by China and other countries in the world".
In New York, the Dow Jones industrial average was down 299.99 points to 24,687.48. By noon (Tuesday, US time), it had regained some ground to a 1.1 per cent loss.
In announcing the possibility of new $200 billion in tariffs, Trump mentioned that he still has an "excellent relationship" with Chinese president Xi Jinping.
The S&P 500 index and the Nasdaq composite are also lower.
As the markets slid, the White House made available one of the president's chief trade advisers to explain the latest moves and push back against critics.
Energy would be added for the first time to a growing trade dispute that has hit imports of Chinese metals and solar panels, and exports of U.S. medical equipment and soybeans.
He also added the actions are (quote) "necessary to defend" the U.S.
One reason investors are anxious: corporate leaders are too.
China was responding after the U.S. kicked off what has become a round of tit-for-tat tariffs that is threatening to develop into a trade war between the world's two biggest economies. Oil futures pulled back, with US crude seeing the deepest declines.
630 migrants rescued from the Mediterranean disembark in Spain
Meanwhile, several hundred more migrants were aboard an Italian coast guard vessel off Sicily on Sunday. The 930-mile journey across the Mediterranean took almost a week.
The Shanghai Composite Index .SSEC ended 3.8 percent lower after slumping almost 5 percent at one point to its lowest level since mid-2016. The Japanese Nikkei 225 lost 1.77 per cent.
Zhang said a trade war may put USA multinationals in danger, since multinationals accounted for one-fifth of total employment in the US.
Worries about a trade war between the U.S. and China has been brewing for most of the year as the two countries have traded threats.
In the latest move in a nascent trade war, President Trump announced Monday evening that he was asking U.S. Trade Representative Robert Lighthizer to suggest $200 billion worth of Chinese goods on which the U.S. could impose a 10 percent tariff.
China may look beyond tit-for-tat tariffs in the looming trade war with the United States, analysts say, with a range of creative options at its disposal, including targeting Hollywood films or dragging its feet on North Korea.
The bid to save NAFTA comes as the fear of a global trade war continues to grow, fuelled by the Trump's administration's plan to impose new tariffs on China that target $200 billion worth of goods.
United States automakers, which are in precisely that position, have targeted China as a key growth market and are also slated to be hit by the bruising tariffs. Tobacco is among the 545 US goods that China plans to impose tariffs on as of July 6.
China's Commerce Ministry on Tuesday criticised the latest threat of tariffs, saying it was an "act of extreme pressure and blackmail that deviates from the consensus reached by both parties after many negotiations, and is a disappointment to the global community".
"If the United States acts irrationally and issues a list, China will have no choice but to take comprehensive measures of a corresponding number and quality and take strong, powerful countermeasures".
The 15,000 vehicles Tesla sold in China a year ago brought in more than US$2 billion, about 17 per cent of total revenue.