Gary Cohn, Trump's former top economic adviser, said last week that a "tariff battle" could result in price inflation and consumer debt - "historic ingredients for an economic slowdown".
USA stocks are mostly higher Wednesday as technology and media companies lead a recovery from the turbulent trading seen the day before.
"Trade is not as big an issue for us as overseas economies and it's easy to believe Trump is bluffing because he does a lot of it." said Paulsen.
If China looks to raise its tariffs on U.S. goods again, President Trump plans to tack additional tariffs on another US$200bn worth of goods.
US stocks fell on Tuesday as a sharp escalation in the trade dispute between the United States and China rattled markets and put the Dow Jones Industrial Average back in negative territory for the year.
On Friday, after the Trump administration's first tariff action, Beijing responded with reciprocal tariffs on $50 billion in USA goods, including cars, soybeans, dairy, oil, propane and other high-value trade categories.
Combined, the potential tariffs on Beijing could reach $450 billion - an amount equal to 89 percent of Chinese goods imported to the United States previous year.
The planned new wave of tariffs would have to go through a similar process of public consultation and comment as the earlier ones before taking effect.
In a separate statement, Lighthizer said that he supported Trump's action and that his agency "is preparing the proposed tariffs to offset China's action".
Trump expressed hope about resolving the ongoing dispute, but pledged: "Canada is not going to take advantage of the United States any longer".
"China apparently has no intention of changing its unfair practices related to the acquisition of American intellectual property and technology", Trump said in a statement Monday.
"Rather than altering those practices, it is now threatening United States companies, workers, and farmers who have done nothing wrong".
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They included tariffs on steel and aluminum imports and a combative stance on trade negotiations from North America to Asia. Pressure from this year's midterms could also put the U.S. at a disadvantage with China in the event of a trade war.
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Even though the Iceland players average 1.90 metres in height, we played all our corners into the air. We can't let our guard down. "I guess our game plan worked nearly perfectly".
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Messi stepped up for the kick but Halldorsson guessed correctly and palmed away the Argentine skipper's side-footed effort. It's a very even World Cup and you're seeing that, because all the games are very close ", said Messi.
USA stock markets fell sharply Tuesday, with investors increasingly nervous about the impact of the escalating fight.
At 9:43 a.m. ET, the Dow Jones Industrial Average was down 238.78 points, or 0.95 percent, at 24,851.7, the S&P 500 was down 20.53 points, or 0.74 percent, at 2,759.13 and the Nasdaq Composite was down 57.84 points, or 0.75 percent, at 7,688.53. The CAC 40 of France fell 1.1 percent and in London the FTSE 100 slipped 0.4 percent.
China's Commerce Ministry on Tuesday criticised the latest threat of tariffs, saying it was an "act of extreme pressure and blackmail that deviates from the consensus reached by both parties after many negotiations, and is a disappointment to the worldwide community".
Lu Zhengwei, chief economist at Industrial Bank in Shanghai, said the Chinese countermeasures would eventually eat into U.S.jobs, but China would feel little impact from the tariffs against its exports.
Later on Friday, China announced its own tariffs on American goods, including a wide range of seafood and agricultural products, many cars and trucks, petrochemicals and an array of medical equipment.
Trump also said that if China retaliates yet again, the United States would pursue additional tariffs on another $200 billion of goods.
Analysts say the direct impact of the tariffs may be limited, especially for the USA economy, which is in strong shape.
The impact likely would be temporary as USA oil becomes less attractive to Chinese buyers.
The tariffs would start to slow US growth, economists warn.
The new USA tariffs would have a measurable effect on Chinese GDP growth - about 0.3 percent - and on US consumers, Deutsche Bank predicted.
The EU yesterday meanwhile approved a raft of tariffs targeting United States goods.
More American targets are likely to follow as soon as the Trump administration follows through with publishing an expanded tariff list. The next step will be for the Office of the U.S. Trade Representative to identify the Chinese goods to be penalized and to conduct a legal review.
The first round of penalties announced by both nations is set to take effect July 6.