China's commerce ministry affirmed that the decision came in response to the USA move this week to increase proposed tariffs on $200 billion of Chinese goods from a 10 percent rate to 25 percent, the Financial Times reported.
The Chinese reaction is sure to ratchet up tensions with the Trump administration at the end of a week that saw stock markets rattled by the intensifying trade battle.
Speaking at a press conference on Friday, foreign ministry spokesman Geng Shuang said: "The Chinese side calls on the U.S. to return to rationality, and eradicate its mistakes to create the right conditions for resolving the problem".
But Kudlow's toughest words came about the Chinese economy itself, which is second only to the United States.
The commerce ministry threat came after Wang met with US Secretary of State Mike Pompeo at a meeting of the Association of Southeast Asian Nations (ASEAN) in Singapore on Friday.More news: U.S. may slap China with higher tariffs, Beijing vows to retaliate
"China is in trouble right now - their economy is lousy, investors are walking out, the currency is falling", Kudlow said, in an unusually strong condemnation of a trading partner. The move was meant to bring China back to the negotiating table for talks over USA demands for structural changes to the Chinese economy and a cut in the bilateral trade deficit. Announcing a higher tariff is required ahead of the hearings and will send a signal that the Trump administration is upping the pressure on China to make serious concessions.
China's finance ministry unveiled new sets of additional tariffs on 5,207 goods imported from the United States, ranging from 5 to 25 per cent.
"The US side has repeatedly escalated the situation against the interests of both enterprises and consumers", the Chinese Commerce Ministry said in its statement.
President Donald Trump has threatened an additional $US200 billion with levies of 10 per cent, a level the administration may raise to 25 per cent in a Federal Register notice in coming days, one of the people said.
During a July 20 CNBC interview, Trump said that he was willing to put tariffs on all $505.5 billion dollars worth of goods that China exports annually to the U.S.