Trump, in a statement announcing the new round of tariffs, warned that if China takes retaliatory action against USA farmers or industries, "we will immediately pursue phase three, which is tariffs on approximately $267 billion of additional imports".
President Trump announced Monday that he is ordering 10 percent tariffs on $200 billion worth of imports from China.
The U.S. had already imposed tariffs on $50 billion in Chinese imports.
Trump's latest escalation of tariffs on China comes after several meetings yielded no progress.
At the same time, the administration said it is still open to negotiations with China.
Former chief economic adviser Gary Cohn tried desperately to convince Trump that tariffs would cost jobs and investment and raise little revenue, at one point telling him that he had a "Norman Rockwell" view of an American economy that bore no relationship to the services-dominated USA economy today.
Donald Trump says the new move is in line with an ongoing study by the United States Trade Representative (USTR).
Speaking Sunday at an economics forum, Lou Jiwei, a former finance minister and chairman of China's sovereign wealth fund, said Beijing should disrupt supply chains of American companies that rely on China's vast manufacturing industries, the website Sina.com reported.
It's the latest round of an escalating trade dispute between the two countries.
Mr Trump's economic adviser, Larry Kudlow, earlier said they were still happy to talk: "We are ready to negotiate and talk with China anytime they are ready for serious and substantive negotiations", he said. It brings all Chinese imports subject to added tariffs to $250 billion, roughly half of China's shipments to the United States a year ago.More news: Martin Gramatica to LeBron, Back Off Zane Gonzalez!
The KPMG modelling found Australia would be hit harder by the US-China trade war than the European Union or Japan. "But, so far, China has been unwilling to change its practices", including theft and force transfer of technology.
"China has had many opportunities to fully address our concerns", Trump said.
"The administration has imposed tariffs on roughly Dollars 50 billion worth of Chinese imports already, in an effort to encourage China to alter its behaviour", the official said.
"China, however, still refuses to change its practices - and indeed recently imposed new tariffs in an effort to hurt the United States economy", President Trump said Monday.
This led to the Australian dollar rising modestly to 71.8 USA cents, amid a weaker greenback overnight.
For Australia, where the dollar has already shed almost 10 United States cents of value since late January, there's a direct impact on our resource exports from lower Chinese growth and an indirect one given that our currency and financial markets are seen as a safe proxy for an exposure to China.
"The sooner President Xi and President Trump meet to craft a new trade path forward, the better", he said.
But the adjustments did little to appease technology and retail groups who argued USA consumers would feel the pain.
"Consumers - not China - will bear the brunt of these tariffs and American farmers and ranchers will see the harmful effects of retaliation worsen". Its tariffs are meant to deliver pain to American farmers, who overwhelmingly backed Trump in the 2016 election and whose interests are represented by powerful lobbyists and members of Congress. Exports to China account for about 60 percent of the overseas sales of American soybean farmers, who stand to lose sales as a result of China's tariffs.