U.S. Treasury Secretary Steve Mnuchin said on Friday that U.S. officials including himself are in regular communication with China as a tariff dispute escalates between the two countries.

"We are willing to negotiate. We are in communication with them regularly," Mnuchin said in an interview with CNBC. "I am in communications," he said.

"On the one hand, we absolutely are willing to negotiate and not get into trade wars but on the other hand, the president is perfectly willing to defend interests," Mnuchin said. 

"Our objective is still not to be in a trade war with [China]," Mnuchin said on CNBC's "Power Lunch" Friday. "I'm cautiously optimistic that we will be able to work this out ... There is the potential of a trade war."

China warned on Friday it was fully prepared to respond with a “fierce counter strike” of fresh trade measures if the United States follows through on President Donald Trump’s threat to slap tariffs on an additional $100 billion in Chinese goods, Reuters explained.

In light of what he called China’s “unfair retaliation” against earlier U.S. trade actions, Trump upped the ante on Thursday by ordering U.S. officials to identify extra tariffs, escalating a tit-for-tat confrontation with potentially damaging consequences for the world’s two biggest economies.

China’s Commerce Ministry spokesman, Gao Feng, called the U.S. action “extremely mistaken” and unjustified, adding that the spat was a struggle between unilateralism and multilateralism. He also said no negotiations were likely in the current circumstances.

“The result of this behavior is to smash your own foot with a stone,” Gao told a news briefing in Beijing. “If the United States announces an additional $100 billion list of tariffs, China has already fully prepared, and will not hesitate to immediately make, a fierce counter strike.”

He was speaking shortly after Trump defended his proposed tariffs on U.S. radio, saying the move might cause “a little pain” but the United States will be better off in the long run.

Asked in an interview with New York station WABC about the effect on U.S. stock markets, Trump said the market has gone up (since he took office) “so we might lose a little bit of it.”

For his part, Mnuchin said the U.S. is in "communications" with China, but didn't want to comment on the progress of the talks.

"Right now we have initiated a plan. The tariffs will take some period of time to go into effect. There will be public comment, while we're in the period before the tariffs go on, we'll continue to have discussions," he said. "The president wants reciprocal trade."

(Newsmax wire services Reuters and Bloomberg contributed to this report).

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