Trump last month asked the US Trade Representative's office to identify $US200 billion of Chinese goods that could be hit with 10 per cent tariffs.
On Friday, Washington had imposed additional 25 percent tariffs on $34bn of Chinese imports, prompting Beijing to immediately respond with proportionate tariffs on $34bn American goods including seafood and soybeans.
Shanghai markets were hardest hit overnight, with stocks there down nearly 2 per cent and the yuan weakening towards last week's 11-month lows, down 0.4 per cent to 6.66 per dollar.
Europe's main bourses, also taken aback as Trump kicked off a North Atlantic Treaty Organisation summit in Brussels by accusing Germany of being a "captive" of Russian Federation, then saw similar falls.
The Commerce Ministry on Wednesday gave no details, but Beijing responded to last week's USA tariff hike on $34 billion of imports from China by increasing its own duties on the same amount of American goods. I get so confused these days.
The concerns were also evident in currency markets.
Trump has campaigned on the claim that trade partners are taking advantage of Americans due to "terrible deals" made by previous United States presidents.
It was industrial metals prices though that took the heaviest hit over worries that the dispute could ultimately dent China's commodity-hungry economy.
Although China has ample supplies of coal, it imports some from the U.S. Last year, China received 3.2 million short tons of U.S. coal, which is equal to 3 percent of the total U.S. coal exports. It also dropped to 55.8 British pence, 63.1 Euro cents and 82.5 Japanese yen.
Investors fear an escalating Sino-American trade war could hit global growth and damage sentiment.More news: Apple Music Now Has More Paying Subscribers Than Spotify in the US
More news: Belgium bests England to take top spot in Group G
More news: Where it all went wrong for Germany at the World Cup
Trade war with the world: United States tariffs on aluminum and steel from Canada, the European Union and other countries have also triggered retaliatory tariffs on U.S. goods.
Chinese tariffs have already taken a toll on USA exports such as soybeans, which raises questions about the possible political repercussions President Trump could face from farmers who supported him in the 2016 election.
She said the downside risk to growth mainly stemmed from trade tensions.
Several traders said they saw some dollar selling by large state banks in the spot market, which went some way to supporting the yuan, though they did not know whether US dollar liquidity offered by the banks was on behalf of the central bank or corporate clients.
Beijing's commitment to its ongoing deleveraging campaign means that tight credit conditions will continue, Yan said.
In New York, the Dow Jones industrial average ended down 219.21 points at 24,700.45.
The dollar index rose 0.6 percent, with the euro down 0.59 percent to $1.1673.
"China provides massive, market-distorting subsidies and other forms of state support to its domestic industries", Shea said.
The Canadian dollar was steady at C$1.3208 per dollar following a loss of 0.75 percent the previous day.
USA financial analysts said Trump appeared to believe there was a political benefit to waging a trade war, although that could change quickly amid economic fallout.