China's Commerce Ministry said immediately after the midnight ET deadline for the tariff hike that it would take countermeasures against the American move. It did not announce what its response would entail but said it "deeply regrets" the turn of events.

Despite the escalation in the trade war, the Shanghai Composite rose 3% and the Shenzhen soared 4%. U.S. stock futures were down only slightly Friday after a volatile week stemming from uncertainty in the negotiations.

President Donald Trump raised the stakes in his trade conflict with China as the U.S. increased tariffs on $200 billion in Chinese goods on Friday.

It had been hoped that a resolution could be reached by the two sides prior to the deadline for the tariff hike, but no deal materialized. Trade talks between the world's two largest economies are set to continue on Friday.

"This evening, (United States Trade Representative Robert Lighthizer) and (Treasury Secretary Steven Mnuchin) met with President Trump to discuss the ongoing trade negotiations with China. The Ambassador and Secretary then had a working dinner with Vice Premier Liu He, and agreed to continue discussions tomorrow morning at USTR," White House deputy press secretary Judd Deere said in a statement Thursday evening.

Despite the ongoing talks about a trade agreement, the Trump administration is hiking duties on the products from 10% to 25%.

The move risks widening a trade war that has spooked investors and raised fears about global economic damage. Only a week ago, the White House was boosting hopes that the U.S. and China would resolve their trade dispute this week and potentially have a deal to announce.

Beijing promised "necessary countermeasures" this week if the U.S. raised tariffs but did not specify the actions it would take to retaliate.

Trump first announced the tariff increase Sunday as the White House accused China of reneging on key parts of a developing agreement. On Wednesday night, he claimed Beijing "broke the deal" — a remark that sent Asian and U.S. stocks tumbling Thursday. U.S. equity markets recovered later in the day after Trump said a deal was still possible this week. He added that he received a letter from Chinese President Xi Jinping and could speak to his counterpart on the phone.

Still, the engagement between Washington and Beijing this week did not prevent Trump from following through on his threat. Ahead of the tariff increase, the president called duties an "excellent" alternative to a trade deal, saying they brought in "billions" for the U.S. government. U.S. consumers bear the brunt of the tariff costs, not China, as Trump has argued.