Washington has carried out the USA president's latest threat, increasing import duties on $200 billion worth of Chinese goods from 10 percent to 25 percent, according to the Federal Register.
But unless there is an agreement by Friday, the entire U.S. trade team is unified in recommending to Mr Trump that the United States go ahead with tariffs, said Treasury Secretary Steven Mnuchin, who was at the briefing.
And while Beijing insisted it would still send its top negotiator to planned talks in the USA on Thursday and Friday, observers said confidence has been shattered, with uncertainty reigning ahead of the high-stakes meeting.
After a week of reports that the U.S might be willing to accept a deal that did not require the level of structural reforms to the Chinese economy that Trump administration officials had called for, President Donald Trump tweeted an announcement that the tariffs would go up to 25 percent on Friday and the remaining $325 billion of Chinese goods would be subject to tariffs shortly.
China had a trade surplus of $13.84 billion (10.59 billion pounds) in April, smaller than forecasts of $35 billion.
"Guess what, that's not going to happen!"
The U.S. and China have raised tariffs on tens of billions of dollars of each other's goods in their dispute over U.S. complaints about Chinese technology ambitions.
USA officials are insisting that any deal be strictly enforced so that China lives up to its promises - something they say Beijing has repeatedly failed to do in the past.
That message was reinforced by financial markets, as U.S. stocks fell by more than two percent for the first time in months amid concerns the renewed trade tensions could scuttle a deal. Trump tweeted on Wednesday.
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United States officials on Monday effectively canceled a six-month trade truce, accusing Chinese negotiators of backsliding on major commitments agreed to thus far in months of talks.
However, even though Chinese Vice Premier Liu He will appear in Washington, D.C., for negotiations Thursday and Friday, Beijing still appears to be playing hardball.
In April China's exports across the Pacific fell 13.2 percent from a year earlier, while imports from the U.S. fell 25.7 percent, according to the data from China's customs administration.
Still, some investors may not want to get on the wrong side of the trade in the event a deal is hammered out as Chinese officials are in Washington this week to continue negotiations.
The Cboe Volatility Index (VIX), known as the "fear gauge", rose to its highest point since January, a sign that Wall Street is throwing a mini-tantrum over Trump's trade policies.
Despite the political fallout back home, senators seemed intent on not breaking ranks with the White House at this crucial moment in the trade talks. If the 25% tariff were extended to the rest of Chinese exports to the U.S. that might knock a further 0.3 percentage points off GDP. He also said he would slap 25 percent tariffs on goods not current subject to import fees.
If tariffs do go up to a full 25% on Chinese goods, it could start to impact US companies' earnings growth and consumer confidence going forward, Raymond James' Adam said.
ANZ estimated more than 80 per cent of the headline decline was due to a sharp drop in shipments to the United States, while its high-tech exports continued to be weighed down by sluggish global demand for smartphones and other electronic gadgets.
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