The US plans to impose roughly USD 50bn in tariffs on Chinese goods and limit the country’s investment activity in the US as payback for what it alleges is years of intellectual property theft.
The White House said the actions are a necessary step to counter unfair competition from China’s state-led economy.
It says years of talks about the issue failed to produce change.
China said it was ready to retaliate with "necessary measures".
US President Donald Trump said he is looking for "reciprocal" trade terms for American companies.
"We’ve spoken to China and we’re in the midst of a very large negotiation," he said at the White House as he signed a memo regarding the activities. "We’ll see where it takes us."
The White House said it has prepared a list of more than 1,000 products that could be targeted by tariffs. Businesses will have the opportunity to comment before the final list goes into effect.
On Thursday, China’s commerce ministry said it was ready to retaliate against the new tariffs.
"China will not sit idly by and let its legitimate rights and interests be harmed, and will certainly take all necessary measures to resolutely defend its legitimate rights and interests," it said in a statement.
According to the Wall Street Journal, China is preparing to hit back with tariffs aimed at President Donald Trump’s support base.
This would include levies targeting US agricultural exports from Farm Belt states.