The US said that it could impose tariffs up to $60bn on Chinese imports, stating that the action was an important measure to counter 'unfair competition' from China.

Beijing said that it will see the end of things and is ready to take 'necessary steps' to counter US sanctions.

Meanwhile, Trump's announcement triggered a minor panic in the US stock markets as it closed lower on Thursday.

Dow Jones lost 724.42 points, while S&P 500 dropped 68.24 points. They finished the day at 23,957.89 and 2,643.69, respectively.

The US announced the sanctions after findings handed over to the White House said that China forces US firms to forge local partnership to enter the Chinese market, which in turn facilitates data transfer.

The report also said that it found evidence that China was conducting and supporting cyber attacks.

The report is the culmination of an investigation ordered by Trump in August last year.

US media had reported that the White House was considering actions against China, which included tariffs between $30bn and $60bn and other measures that would restrict investment.

The reports said that the Trump administration could also seek help from the World Trade Organisation.

Robert Lighthizer, America's top trade negotiator, told US Congress members on Wednesday that the US is looking to put "maximum pressure on China and minimum pressure on US consumers".     

"It's an enormously important issue," he said. "We think it is perhaps the most important thing that will have been done in terms of rebalancing trade."

China's take

On Thursday, China's commerce ministry said in a statement that it won't sit idle and will take necessary steps.

"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," the statement read.

It also accused the US of not complying with a 2014 ruing by the World Trade Organization (WTO), which had ruled against America's anti-subsidy tariffs on Chinese products.

The statement said, "It has seriously damaged the fair and just nature of the international trade environment, and weakened the stability of the multilateral trading system."

China is also considering imposing tariffs on $3bn worth of US products in retaliation.

However, Beijing said that it hopes the US won't be taking the bi-lateral trade relations to a dangerous place and would pull back from the brink of a trade war.

China has also planned a two-step retaliatory action which includes: 

• A 15 percent tariff on 120 goods worth almost $1bn - including fresh fruit, nuts and wine

• A 25 percent tariff on eight goods worth nearly $2bn - including port and aluminium scrap

According to BBC, the probable US China trade war also jolted the Asian market.

"The benchmark Nikkei 225 was down 3.5 percent in late morning trade, Australia's S&P/ASX 200 was down close to 2 percent, and markets in China were all in negative territory," BBC reported.