The Trump administration is threatening to impose fresh tariffs on another $200bn (£150bn) of Chinese goods – with Beijing branding the plans as "totally unacceptable".
More than 6,000 items could be affected – including burglar alarms, car tyres, handbags, baseball gloves, carpets, toilet paper, dog food, and hundreds of food products.
Last Friday, the US imposed 25% tariffs on Chinese imports worth $34bn (£25bn).
China hit back with its own levies – targeting US products such as mixed nuts and whiskey.
Washington’s initial tariff list focused on Chinese industrial products in an attempt to limit the impact on US consumers, but this expansion would start to hit the items regularly purchased by American households.
Announcing proposals for the new tariffs, US Trade Representative Robert Lighthizer said: For over a year, the Trump administration has patiently urged China to stop its unfair practices, open its market, and engage in true market competition.
Rather than address our legitimate concerns, China has begun to retaliate against US products… There is no justification for such action.
We have been very clear and detailed regarding the specific changes China should undertake. Unfortunately, China has not changed its behaviour – behaviour that puts the future of the US economy at risk.
Mr Trump has threatened to tax $550bn (£415bn) in Chinese products – exceeding America’s total imports from China last year.
The latest escalation in the trade dispute sent markets lower.
The S&P 500 and Dow futures dropped 1%, indicating Wall Street would open lower, while Japan’s Nikkei declined 1.5%. Stock markets in Shanghai dipped 1.8%, and Hong Kong fell more than 1.4%.
According to the US, China uses predatory practices in a push to challenge American technological dominance – and allegedly forces American companies to hand over technology in exchange for access to the US market.