Chinese and US negotiators are attempting to salvage a trade deal just hours before fresh US tariffs are due to come into force.
US President Donald Trump says the two sides were close to reaching a deal but China attempted to renegotiate.
The US is shortly due to raise tariffs on $200bn (£152bn) of Chinese goods, while China says it will retaliate.
The International Monetary Fund (IMF) said the row poses a “threat to the global economy”.
“As we have said before, everybody loses in a protracted trade conflict,” the body which aims to ensure global financial stability said in a statement, calling for a “speedy resolution”.
The Chinese delegation, led by Vice-Premier Liu He, is meeting US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin.
President Trump also said he received a “beautiful letter” from Chinese counterpart Xi Jinping and that they would probably speak soon.
China has been a frequent target of Donald Trump’s anger, with the US president criticising trade imbalances between the two countries and Chinese intellectual property rules he says hobble US companies.
Ahead of the discussions, he told a rally China had “broke the deal”.
On top of the new tariffs, due to come into force at 00:01 EDT (04:01 GMT) on Friday, he says he is also taking steps to authorise new tariffs on another $325 billion in Chinese imports.
What exactly sparked the US president’s actions, which apparently took China by surprise, is unclear.
US sources told Reuters news agency that last week China returned a draft agreement with changes that undermined its commitments to address key US demands.
Tariffs are taxes paid by importers of foreign goods, so the tariff imposed by the US on Chinese goods would be paid by American companies.
China denies backtracking on the deal and has said it “keeps its promises”.
If the US tariffs go ahead, the Chinese have said they will retaliate in kind.
“The escalation of trade friction is not in the interests of the people of the two countries and the people of the world,” the Chinese Commerce Ministry said in a statement.
“The Chinese side deeply regrets that if the US tariff measures are implemented, China will have to take necessary countermeasures.”
Each side has hinted that the other has more to lose. At the rally Mr Trump said if no deal was struck there was “nothing wrong with taking in more than $100bn a year” while China’s state-run Global Times said China was “much better prepared” than the US.
The proposed US measures will see rates on a vast array of Chinese-made electrics, machinery, car parts and furniture jump from 10% to 25%.
China and the US are the world’s biggest economies so deterioration in their relations will inevitably have an impact beyond their borders.
The two have already imposed tariffs on billions of dollars worth of one another’s goods, creating uncertainty for businesses and weighing on the global economy.
Stock markets around the world have had a torrid week with investors seeking safer assets.
The IMF has said the escalation of US-China trade tension was one factor to have contributed to a “significantly weakened global expansion” late last year as it cut its 2019 global growth forecast.