China on Saturday raised tariffs to a maximum 25 percent on $60 billion worth of U.S. products in retaliation for Washington's latest tax hike on Chinese goods, fanning fears that a trade war between the world's two biggest economies will be perpetuated.

U.S. President Donald Trump has also tried to strike a better trade deal with Beijing by taking steps to stifle China's technology sector, such as effectively banning American firms from supplying parts to Chinese telecommunication giant Huawei Technologies Co.

The Chinese leadership led by President Xi Jinping had indicated it would implement further retaliatory measures against Washington, depending on what Trump does. China has recently hinted at restricting its supply of rare earth minerals to the United States.

An escalation in economic and technology tensions between the world's major powers has rattled financial markets across the globe, blurring the outlook for the world economy.

The tariffs, which came into effect on Saturday, cover a total of 5,140 U.S. products including liquefied natural gas as well as petrochemical and food goods, whose tariff levels were lifted to up to 25 percent from the current 10 percent.

China, meanwhile, is the world's dominant supplier of rare earths that are vital to the production of high-tech goods like hybrid cars and mobile phones. The United States is believed to receive around 80 percent of its rare earth imports from China.

The United States and China held ministerial-level trade talks in Washington early last month, but they made little progress, leading the Trump administration to raise U.S. tariffs on $200 billion of Chinese products from 10 percent to 25 percent.

In addition to the hike, Trump has stepped up pressure on China by saying Washington has started work to impose a 25 percent levy on the remaining $325 billion of Chinese goods not yet subject to tariffs. The measure could be enforced as early as in late June.

Trump has urged China to take steps to rectify its massive trade surplus with the United States and to address what Washington regards as Beijing's unfair trade practices such as alleged intellectual property and technology theft by Chinese firms.

The U.S. president has accused China of reneging on commitments it had made during months of negotiations.

China's economy has shown signs of slowing down with additional tariffs dampening exports to the United States, the world's biggest market, and choking private spending and investment at home.

In April, the International Monetary Fund maintained its forecast for global economic growth in 2020 at 3.6 percent but noted that "the possibility of further downward revisions is high," citing risks including trade tensions and financial vulnerabilities.