China's state media warned U.S. President-elect Donald Trump his pledge to slap additional tariffs on Chinese goods over fentanyl flows could drag the world's top two economies into a mutually destructive tariff war.

Mexico said it would slap tit-for-tat tariffs on the US, while China said Trump's finger-pointing "runs completely counter to facts".

While China could offset American tariffs by letting its currency fall, that might endanger Beijing’s recent efforts to stabilize the economy.

U.S. President-elect Donald Trump said on Monday that on his first day in office he will impose a 25% tariff on all products from Mexico and Canada, and an additional 10% tariff on goods from China. The announcement sparked a dollar rally.

If enacted, they would violate the 2020 deal that the United States inked with Canada and Mexico during Donald Trump’s first term.

Reaction to Trump's day one promise to slap tariffs on three of the America's key trading partners: Mexico, Canada and China. The president-elect framed the proposal as a response to the fentanyl crisis.

Trump's plan for tariffs against Canada and Mexico could dramatically raise prices for Americans and threaten a trade agreement negotiated by his own administration.