Tariffs on Chinese products that were impacted have risen to 25% from 10%, and Beijing has vowed to retaliate.
China says it”deeply regrets” the move and might need to take”necessary counter-measures.”
It comes as officials from both sides are attempting to salvage a trade deal in Washington.
Only recently, the US and China seemed to be close to ending weeks of trade tensions.
The latest US tariff increase was affirmed by china’s Commerce Ministry on its website.
“It’s hoped that the united states and the Chinese sides will work together… to resolve current problems through co-operation and appointment,” it said in a statement.
Tariffs are taxes paid by importers on goods, so firms who bring goods will pay the tariff.
Stock markets rose with the Hang Seng index up 1% and the Shanghai Composite nearly 2% greater.
After US President Donald Trump flagged the tariff increase on Sunday however markets had dropped.
The US imposed a 10% tariff on $200bn worth of Chinese products – including fish, handbags, clothes and footwear – year.
The tariff was expected to increase at the start of the calendar year, but the growth was postponed as negotiations advanced.
What will be the impact of the tariff increase?
The US-China trade war has weighed on the worldwide market within the past year and generated uncertainty for businesses and customers.
Though Mr Trump has downplayed the impact of tariffs on the US market, the increase is very likely to affect consumers and some companies as firms may pass on some of the cost, analysts said.
Deborah Elms, executive director at the Asian Trade Centre, said:”It’s likely to be a big shock to the economy.
“Those are all US companies that are suddenly facing a 25% rise in cost, after which you have to remember that the Chinese are going to retaliate.”
“While we’re disappointed that the stakes have been raised, we nevertheless support the ongoing attempt by both sides to achieve agreement on a strong, enforceable deal which resolves the fundamental, structural difficulties our members have long faced in China.”