Last week, Trump tweeted the United States could win a trade war.
"China doesn't want to fight a trade war, nor would we take initiatives to ignite a trade war", he said.
But China will not start a trade war and it will continue talks with the U.S., he said at a press briefing on the sidelines of the ongoing annual parliamentary session.
A trade war between China and the United States would be disastrous not only for the two countries involved, but also the rest of the world, Beijing warned on Sunday.
Trump's announcement on tariffs underlined concerns about rising USA protectionism, which has sparked bouts of turmoil in global financial markets over the past year as investors feared a damaging trade spat will shatter a synchronized uptick in world growth. China has repeatedly vowed to defend its "legitimate rights and interests" if targeted by U.S. trade actions. Trump said Thursday that he was slapping tariffs of 25 percent on imported steel and 10 percent on aluminum, temporarily exempting big steel producers Canada and Mexico.
This could be further cut by 35 per cent if the United States lifts the ban on high-tech exports to China, he added.
"A trade war will be catastrophic for China, the United States, and the rest of the world", he said.
China absorbed $136.3 billion in foreign investment a year ago.
"We are not only talking for now, we will continue to talk in the future", he said. "If they drop their horrific barriers & tariffs on USA products going in, we will likewise drop ours".
Trump's response came after Malmstrom on Twitter described what she called "frank" but fruitless talks with US Trade Representative Robert Lighthizer in Brussels last Saturday.
As we reported earlier, new tariffs on aluminium import were adopted in the U.S. this week. "The outcome will only be harmful", Foreign Minister Wang Yi said.
Mr Trump said on Saturday the U.S. was "working very quickly on a security agreement" so as not to impose the tariffs on "our ally, the great nation of Australia".
Trump has called the tariffs a matter of national security while threatening to tax European vehicle imports and impose "reciprocal taxes" on countries that charge higher duties on USA goods than the United States now charges on their products.