The Wall Street Journal, citing unnamed Chinese officials, said Beijing was considering steps including holding up licenses for US companies, delaying approvals of mergers involving USA firms, and stepping up border inspections of American goods.
The abrupt escalation is "totally unacceptable", said a Commerce Ministry statement.
Donald Trump's administration last week imposed a 25-percent tariff on a wide range of Chinese products, including automobiles.
It also includes consumer goods ranging from vehicle tires, furniture, wood products, handbags and suitcases, to dog and cat food, baseball gloves, carpets, doors, bicycles, skis, golf bags, toilet paper and beauty products.
The Trump administration previously said it "erred" in supporting China's membership of the WTO because it has "proven to be ineffective in securing China's embrace of an open, market-oriented trade regime", according to a US Trade Representative report released in January.
But China has rebuffed USA complaints and denied any harm was done to U.S. companies, and instead retaliated "without any global legal basis or justification", Lighthizer said.
"Despite the relative optimism our members feel guarded about the future", AmCham said in its statement. China imported only $130 billion in goods from the United States past year, but it could retaliate through other means, including regulatory moves and investigations of U.S. companies. Each side is planning tariffs on a further $16 billion in goods that would bring the totals to $50 billion.
It seems the guidance from Trump is to escalate the trade war, rather than negotiate an end to it.
Japan's benchmark Nikkei 225 fell 1.2 percent, and the South Korean Kospi lost 0.6 percent, while Hong Kong's Hang Seng shed 1.3 percent.
The Dow Jones Industrial Average fell 219.21 points, or 0.88 percent, to 24,700.45, the S&P 500 lost 19.82 points, or 0.71 percent, to 2,774.02 and the Nasdaq Composite dropped 42.59 points, or 0.55 percent, to 7,716.61.
The onshore yuan tracked its offshore counterpart lower with traders closely watching the key 6.7 per dollar level as pressure mounted on the currency. The move made good on the president's threat to respond to China's retaliation for the initial US tariffs on $34 billion in Chinese goods, which went into effect on Friday. They warned tariffs on imports raise consumer prices and expose US farmers and manufacturers to retaliation.
"USTR will proceed with a transparent and comprehensive public notice and comment process prior to the imposition of final tariffs, as we have for previous tariffs".
Concerns about an escalating U.S.
There have been no confirmed high-level talks between the world's two largest economies since an early June visit to Beijing by U.S. Commerce Secretary Wilbur Ross that achieved no breakthroughs.
Jack Ablin, chief investment officer for Cresset Wealth Advisors, said tariffs can have big effects: a tariff on an import from one country can lead to broad price increases for similar items, and rising taxes and costs might cause companies to change their supply lines in less efficient ways. The US is confident China will buckle.
Companies are watching USA chipmaker Qualcomm Inc., which has waited for months for Chinese regulators to decide whether to allow its proposed $44 billion acquisition of NXP Semiconductors.
President Donald Trump has threatened to tax as much as $550 billion in Chinese products an amount that exceeds America's total imports from China past year. During a visit to Germany this week by Chinese Premier Keqiang Li, the countries signed business deals worth more than $23 billion. -China trade war made markets topsy-turvy on Wednesday, with US stocks breaking a four-session winning streak and Brent crude prices seeing their biggest one-day drop in two years.