USA ambassador Dennis Shea, who was among the first to speak at the closed-door review, argued that China had exploited its membership to take advantage of other nations and that if unchecked Beijing's misconduct would ruin the WTO.
The move is a significant escalation of the trade war between Washington and Beijing, further raising the dangers of a major economic shock.
Senate Finance Committee Chairman Orrin Hatch, R-Utah, responded to Lighthizer's announcement with dismay. But the mood on Wall Street is darkening, with analysts increasingly warning of the potential impact on financial markets as the world's two largest economies square off.
Just days after firing the first shot in its trade skirmish with Beijing, the Trump administration unveiled a list of 6,000 Chinese products ranging from toilet paper to baseball gloves that will face a 10pc tariff.
"It is now much more likely that the dispute will continue for a prolonged period of time and that we will see ratcheting up of protectionist measures", Elena Duggar, an associate managing director at credit rating agency Moody's, said in a research note after the Trump administration late Tuesday surprised investors by threatening to impose 10 percent tariffs on an additional $200 billion of Chinese goods.
"For many years, China has pursued abusive trading practices with regard to intellectual property and innovation", Mr. Lighthizer said in a statement on Tuesday.
Li said that the latest United States proposals would hurt both countries and pointed to declines in Chinese export growth and overseas investment to the U.S. in the first half of this year. This has raised concerns that China could retaliate with non-tariff trade measures.
Thousands of Chinese imports are under threat in the newly suggested tariffs, including hundreds of food products as well as vehicle tires, furniture, wood products, handbags and suitcases, to dog and cat food, baseball gloves, carpets, doors, bicycles, skis, golf bags, toilet paper and beauty products.
"The trade dispute between China and the U.S.is a big deal, and to the extent that it goes to a full scale war that potentially is recessionary basically for the global economy so we have to be careful here", Tal said.
Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., July 11, 2018.
The Chinese government, however, called it "totally unacceptable" and said it would take unspecified countermeasures. The US has suggested that it may ultimately impose tariffs on $500 billion worth of Chinese goods, or roughly the entire amount of US imports from China. "If the USA goes ahead with more, China needs a combination of tools and it is prudent to guard against downside risk to growth too".
"But more tariffs like these will punish America's manufacturing workers - and could undermine our hard-won gains thanks to tax and regulatory reform". Those nations also have retaliated.
China imports far less from the United States than the U.S. imports from China.
The U.S. imposed an initial round of 25% tariffs, applying to $34 billion in imports, as part of a $50 billion tariff plan.
Pence cited several exporting opportunities that he said have improved during the Trump administration, including beef to China and poultry to South Korea.