The US has hit China with more than a doubling of its tariffs on over $200 billion worth of its goods, following through with the threats made by President Donald Trump.
The affected products will now see tariffs rise from 10% to 25%. It will see US companies pay an extra 15% for Chinese goods in a move designed to deter them and instead favour US-made products.
Mr Trump has been threatening such a move for months as the two countries try to find an agreement over a trade deal, and reiterated it on Thursday after accusing China of 'breaking the deal'.
China now says it "deeply regrets" the US' decision, but has insisted it will retaliate.
In a statement, China's Commerce Ministry said: "It is hoped that the US and the Chinese sides will work together... to resolve existing problems through co-operation and consultation."
The American Chamber of Commerce in China said: "While we are disappointed that the stakes have been raised, we nevertheless support the ongoing effort by both sides to reach agreement on a strong, enforceable deal that resolves the fundamental, structural issues our members have long faced in China."