Wall Street was down sharply on Friday following the Chinese response, which would be imposed from April 10, after the Trump administration's sweeping levies knocked off $US2.4 trillion ($A4 trillion) from US shares.
In the stand-off between the world's two biggest economies, China also announced controls on exports of some rare earths while Trump also doubled down, vowing not to change course.
China added 11 US bodies to the "unreliable entity" list, which allows China to take punitive actions against foreign entities, including firms linked to arms sales to democratically governed Taiwan which China claims as part of its territory.
Other affected countries like Canada have also readied retaliation in a mounting trade war after Trump raised US tariff barriers to their highest level in more than a century, leading to a plunge in world financial markets.
Trump this week declared a 10 per cent baseline tax on imports from all countries and higher tariff rates on dozens that run trade surpluses with the United States.
Investment bank JP Morgan said it sees a 60 per cent chance of the global economy entering recession by year-end, up from 40 per cent previously.
Wall Street fell sharply on Friday morning, after China announced its retaliatory tariffs a day after the Trump administration's sweeping levies knocked off $US2.4 trillion ($A3.8 trillion) from US equities.
Shares of big tech stocks fell, helping to drive the Nasdaq toward a bear market.
Companies with big exposure to China and Taiwan for manufacturing their products were hard-hit, with Apple down 4.7 per cent and Nvidia down 3.4 per cent.
The Nasdaq showed a 3.69 per cent decline, bringing the index to 20 per cent below its all-time closing high in December.
"This is significant and is unlikely to be over, hence the negative market reactions," said Stephane Ekolo, Market & Equity Strategist, Tradition, London.
"Investors are afraid of a 'tit for tat' trade war situation."
Federal Reserve chair Jerome Powell said on Friday that the tariffs were "larger than expected" and elevated the risk of both higher inflation and slower growth.
In prepared remarks at a conference, Powell did not address the swoon in US stocks directly but acknowledged that the same uncertainty engulfing investors and company executives was facing the Fed.
Trump's team has played down the market turbulence as an adjustment that would prove beneficial in the long run.
The White House touted stronger-than-expected job data on Friday, after a Labor Department report showed the US economy added far more jobs in March than predicted.
But Trump's sweeping import tariffs could test the labour market's resilience in the months ahead amid sagging business confidence.
"To the many investors coming into the United States and investing massive amounts of money, my policies will never change. This is a great time to get rich, richer than ever before!!!" Trump said in a social media post in all caps.
After China's retaliation, he posted: "China played it wrong, they panicked - the one thing they cannot afford to do!"
Trump on Thursday had said he was open to talking to China and making a deal over TikTok by providing relief for US tariffs on Chinese goods in exchange for Beijing officials' approval of the sale of the ByteDance-owned short video app.
Speaking to reporters on Air Force One, Trump said it was just an example and did not answer a question on whether plans were underway for him to talk to Chinese President Xi Jinping.
US Secretary of State Marco Rubio on Friday disputed any economic crash, telling reporters that markets were reacting to the change and would adjust.
"Their economies are not crashing. Their markets are reacting to a dramatic change in the global order in terms of trade," he said at a press conference in Brussels.
"The markets will adjust."
With European shares also tumbling to the biggest weekly losses in years, the European Union's trade commissioner Maros Sefcovic will speak to US counterparts.
"We will not shoot from the hip – we want to give negotiations every chance to succeed to find a fair deal, to the benefit of both sides," he said on social media.
with AP
