The country could also take further measures, such as targeting United States agriculture - 60 percent of USA soya beans are sold to China.
It retaliated on Friday afternoon with plans for more than $4 billion in tariffs on United States pork, aluminium, wine and other products.
But some labor unions and Democrats said Trump was justified in delivering a swift blow to China after years of a lax response from the U.S. But "it's inevitable that Chinese companies develop and sell products similar to those of American companies through contract electronics manufacturers", a senior official at a Japanese manufacturer said.
The US tariffs won't kick in for 60 days, to allow for negotiations - but China appears in no mood to talk.
"If a trade war were initiated by the United States, China would fight to the end to defend its own legitimate interests with all necessary measures".
Business groups mostly agree that something needs to be done about China's aggressive push in technology, but they worry that China will retaliate by targeting USA exports of aircraft, soybeans and other products and start a tit-for-tat trade war of escalating sanctions between the world's two biggest economies. The WTO has repeatedly drawn the ire of the administration but it could provide a resolution that avoids a trade war.
Senator Sherrod Brown welcomed the news that the Trump administration is taking steps to launch crackdown on China's violation of intellectual property laws.
If there is a trade war, the first shots were fired by China many years ago, US officials say, and it is Beijing that has long "gamed" the rules of the World Trade Organization for its own benefit.
Still, it is unclear under what terms China and the US are willing to talk, with Beijing adamant that the USA tariffs constitute a unilateral move that it rejects.
As per USTR, the American US consultation request identifies apparent breaches by China of WTO rules, harming the intellectual property rights of US companies and innovators. Washington reports different figures that put the gap at a record $375.2 billion.
"China has the ability to inflict significant economic harm on USA exporters of certain goods and can also use other overt as well as covert actions such as supply chain disruptions to hurt USA manufacturers". Trump also directed Treasury Secretary Steven Mnuchin to propose new investment restrictions on Chinese companies within 60 days to safeguard technologies the US views as strategic, said senior White House economic adviser Everett Eissenstat. "China can not appear subservient to the U.S". Trump's sanctions will not be without ramifications however, with President Xi's China expected to retaliate strongly.
Trump is planning to impose the tariffs over what his administration says is misappropriation of US intellectual property. That said, there is a risk of a mounting cycle of retaliation. The U.S. military put countering China and Russian Federation at the centre of a new national defence strategy it recently unveiled.
As Australian shares tumbled, Prime Minister Malcolm Turnbull played down fears of a full-scale global trade war.
As an economist and expert in worldwide trade, I don't see how the proposed tariffs will resolve either one. "This could disrupt global supply chains and damage investor sentiment", said Dario Perkins, head of global macroeconomics research at TS Lombard, a London-based economic consultancy.
Russia's delegation at the WTO raised concerns about the tariffs at a meeting of the trade body on March 23, Russian state-run news agency TASS reported.
The US administration's increasing focus on punishing China was evident in its decision to exempt allies like the EU, South Korea, Brazil, Canada and Mexico from what were supposed to be worldwide tariffs on steel and aluminium imports. Lighthizer told U.S. lawmakers on Thursday that the European Union, along with Argentina, Australia, Brazil and South Korea, would also be exempted.