US President Donald Trump threatened retaliatory action against two major Asian trading partners Tuesday, warning of sanctions against China while vowing to revise or scrap a free trade deal with South Korea.

Accusing Beijing of decimating American steel and aluminum industries, Trump said he was "considering all options," including tariffs and quotas.

Trump recently received two Commerce Department reports concerning alleged Chinese subsidies for steel and aluminum exports -- materials that are vital for industries from construction to autos.

He has another two months to decide on possible retaliatory action, but strongly indicated that he is leaning toward hitting back at Beijing.

"I will make a decision that reflects the best interests of the United States, including the need to address overproduction in China and other countries,' he said.

Experts believe any US sanctions would prompt China to respond with sanctions of its own, raising the specter of a trade war between the world's two largest economies.

China produces around half of the world's steel and is accused of flooding the market in order to keep the economic wheels turning at home.

For decades Chinese leaders have been consumed with the need to -- as former president Hu Jintao once put it -- create "25 million jobs a year."

But Trump also is under domestic pressure. He came to office vowing to be a champion of America's rust belt and said Monday he had to act to save the "empty factories" he saw on the campaign trail.

- Widening trade deficit -

The US trade deficit -- which Trump has vowed repeatedly to fix -- widened even further during his first year in office, up 12 percent to $566 billion.

"They're dumping and destroying our industry, and destroying the families of workers, and we can't let that happen," Trump told a group of Republican and Democratic lawmakers at the White House.

Trump received some support from the group, but also warnings that action against China could drive up prices and hurt US manufacturing outside the steel and aluminum sectors.

"Mr. President, I think we do need to be careful here, that we don't start a reciprocal battle on tariffs,' said Republican Senator Roy Blunt.

"You know, we make aluminum and we make steel" he said. "But we buy a lot of aluminum and we buy a lot of steel as well."

Daniel Ikenson of the pro-trade CATO institute said that Trump may be forced moderate his actions, if not his tone.

"Despite the rhetoric, Trump doesn't want to subvert 'his' economy," Ikenson wrote this week.

"Trump is today more aware that the impulsive actions he has threatened to take would carry some very significant economic and political costs."

That is also true for relations with South Korea, which are already strained over Trump's saber rattling over North Korea's nuclear program.

Taking aim at Seoul, Trump complained that America's 2012 free trade deal with South Korea "was a disaster," vowing the United States would renegotiate a "fair deal" or scrap it altogether.

The Trump administration initiated talks to renegotiate the United States-Korea (KORUS) trade agreement in July last year, arguing it was lopsided because American's bilateral trade deficit had ballooned under it.

"We have a very, very bad trade deal with Korea," Trump said. "For us it produced nothing but losses."

Trump's comments came a day after he singled out South Korea and China, along with Japan, over their trade surpluses with the United States, accusing them of "getting away with murder."

China warns Trump trade sanctions threaten global economy
Beijing (AFP) Feb 14, 2018 - US trade sanctions will hit the world economy, Beijing warned Wednesday, after President Donald Trump threatened to impose fresh tariffs on imports from China.

Trump said he was "considering all options," including tariffs and quotas, after he accused China of decimating the American steel and aluminium industries.

Washington has already imposed a range of tariffs on Chinese-made goods, sparking fears of a tit-for-tat trade war between the world's top two economies as China also threatens to take action.

Foreign ministry spokesman Geng Shuang told reporters that "any sign of unilateralism or protectionism will ... worsen global trade issues and will hurt the recovering momentum of the world economy".

He added that with the sheer volume of trade and integration between the US and Chinese economies, some friction was natural.

However, "China always regards the US as an important cooperation partner in trade and economy, and we hope we will continue to open our respective markets wider", Geng said.

The Trump administration has two months to decide whether to take action on Chinese aluminium, steel and intellectual property practices.

China produces around half of the world's steel but stands accused of "dumping" cheap steel on global markets to gain market share.

The two countries have already begun trading sanctions in what China's commerce ministry warned could become a "vicious circle".

On Monday Beijing announced it had taken aim at imports from the US of styrene, a key chemical in the manufacture of styrofoam.

Last week it launched an anti-dumping investigation into sorghum imports from the US, worth almost $1 billion last year.

The measures come a month after the Trump administration slapped new tariffs on Chinese-made solar panels and washing machines, the most recent in a series of trade cases that have rattled Beijing.

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China 'worried' over US trade relations as surplus narrows
Beijing (AFP) Feb 8, 2018
China expressed concern on Thursday over the US ramping up trade investigations as official data showed its surplus with America narrowed in January after reaching record levels last year. This week China announced an investigation into imports of a US agricultural product after President Donald Trump's administration launched a spate of new trade tariffs and probes into Chinese goods. The Trump administration has shown no signs of letting up, with major decisions looming on Chinese aluminium ... read more