China has underestimated President Donald Trump's resolve to press ahead with tariffs unless Beijing changes its "predatory" trade practices. A top U.S. trade advisor said on Tuesday, in comments that undercut the chances of a negotiated settlement to a looming trade war between the world's economic superpowers.

The threat of a growing trade war with China hit financial markets hard, with Beijing vowing a firm response after Trump on Monday said he would implement tariffs on an additional $200 Billion of imports from China if Beijing went ahead with reprisals over an initial set of U.S. tariffs.

White House trade adviser Peter Navarro, a sharp critic of China, said China has more to lose from any trade war: "The fundamental reality is that talk is cheap," Navarro told reporters again accusing China of "predatory" trade policies." I think that the other side may have underestimated the strong resolve of President Donald J. Trump," Navarro added "If they thought that they could buy us off cheap with a few extra products sold and allow them to continue to steal our intellectual property and crown jewels, that was a miscalculation."

The threat of new tariffs against China puts the world's two largest economies against each other and looks to disrupt global supply chains for the tech and auto industries, two sectors that rely heavily on outsourced components.