Hong Kong (CNN Business) The United States has escalated its trade war with China, hiking tariffs on $200 billion worth of Chinese exports hours after trade talks held in Washington failed to produce a breakthrough .

Tariffs on the targeted exports increased from 10% to 25% at 12:01 a.m. ET on Friday, prompting a swift rebuke from Beijing.

The Chinese government expressed "deep regret over the development" and pledged to take "necessary countermeasures."

"We hope the United States will meet us halfway, and work with us to resolve existing issues through cooperation and consultation," China's Ministry of Commerce said in a statement. The ministry did not give specifics on how it would respond.

Liu He, China's vice premier, arrives at the Office of the U.S. Trade Representative in Washington on Thursday.

The Trump administration's decision to impose new taxes on Chinese exports comes after the United States accused China of backtracking on commitments made during recent negotiations on trade.

Trump has repeatedly slammed China for indulging in what he says are unfair trade practices, particularly with regards to access to its giant market, intellectual property and technology transfers.

The talks are aimed at settling the dispute, which has hurt Chinese exporters, damaged some US companies and slowed global growth since it began last July.

A Chinese delegation led by the country's top trade negotiator, Vice Premier Liu He, arrived in Washington on Thursday for the latest round of discussions.

Under the current circumstances, Liu said he "hopes to engage in rational and candid exchanges with the US side," according to China's state news agency. Liu added that raising tariffs is not a solution to the problems.

Trump said hours before talks began on Thursday that he had just received an upbeat letter from his Chinese counterpart, Xi Jinping, suggesting a deal was still attainable.

"It's possible to do it," Trump said when asked about the prospect of an agreement that would prevent a tariff hike on Chinese goods. "I have no idea what's going to happen."

Yet the outward optimism did not appear to translate into a last-minute agreement. Negotiators are expected to meet for a second day of talks on Friday.

Trump has already suggested that he's ready to bring in more trade penalties if his demands are not met. He threatened in a tweet on Sunday to raise taxes on virtually all of China's exports to the United States.

"While we believe that a trade deal will eventually be reached between the US and China, the risk of a complete breakdown in trade talks has certainly increased," said Michael Taylor of Moody's Investors Service.

Tariff reaction

Global stock markets have endured a week of extreme volatility prompted by uncertainty over trade. Reactions were mixed on Friday.

Benchmark indexes in Europe posted gains of less than 1% in early trade. But US stock futures were lower.

Analysts say the tariff hikes could hit growth in both economies and drag down global growth. Many experts believe that Beijing will be forced to step in with new stimulus measures if the conflict escalates further.

Trump's move to increase tariffs has startled US businesses. Importers received just five days' notice about the sudden rise in penalties.

"The tariff increase inflicts significant harm on US industry, farmers and consumers," said Jacob Parker, vice president of the US-China Business Council, a trade group that represents American companies' interests in China.

"It will decrease the competitiveness of American companies, reduce the efficiency of their global supply chains, and reverberate through the US economy. Pure and simple, this is a tax on the American consumer," he added.

Pure and simple, this is a tax on the American consumer." Jacob Parker, vice president of the US-China Business Council

Consumers are also feeling some pain: The American Apparel and Footwear Association estimates that a 25% tariff on apparel imports will increase costs for a family of four by $500 a year.