Trump, due to meet Xi in about three weeks in South Korea, complained on social media about what he characterised as China's plans to hold the global economy hostage after China dramatically expanded its rare earth element export controls on Thursday.
China dominates the market for such elements, which are essential to tech manufacturing.
Trump said there was no reason to hold the meeting with Xi that he had previously announced.
Chinese officials never confirmed the meeting between the leaders.
The remarks signalled the biggest rupture in relations in four months and immediately raised questions about whether a detente between the Chinese and US economies - the world's biggest factory and its biggest consumer - can survive.
Trump, a Republican who has wielded tariffs paid by US importers against friends and foes, said on Friday that he was weighing a "massive" increase in such levies on Chinese-made goods.
Such a step could revive a destabilising tit-for-tat trade war that the US and China paused amid painstaking diplomacy earlier this year.
China has long called for the US to abandon unilateral trade restrictions it says undermine global commerce.
The unexpected broadside shook global financial markets, sending the benchmark S&P 500 Index sliding by 2 per cent, its biggest one-day drop since April when a steady barrage of tariff announcements by Trump was a central feature of market volatility.
Investors fled into the safe haven of gold and US Treasury securities, and the US dollar weakened against a basket of foreign currencies.
"Trump's post could mark the beginning of the end of the tariff truce," said Craig Singleton, a China expert at the Foundation for Defense of Democracies, who said the US viewed the export control steps as a betrayal.
"Beijing appears to have overplayed its hand."
In his post, Trump said China has been sending letters to countries worldwide saying it planned to impose export controls on every element of production related to rare earths.
He said he had been contacted by unnamed countries incensed over China's steps and said he was surprised because of the "very good" recent relationship with the country.
"Dependent on what China says about the hostile 'order' that they have just put out, I will be forced, as President of the United States of America, to financially counter their move," Trump said on Truth Social.
"For every Element that they have been able to monopolise, we have two."
He added: "I was to meet President Xi in two weeks, at APEC, in South Korea, but now there seems to be no reason to do so."
Trump had earlier said he would meet Xi on the sidelines of the Asia-Pacific Economic Cooperation forum being held in Gyeongju, South Korea, starting on October 31.
Economic tensions had been rising in recent days.
The US administration on Thursday, for instance, proposed banning Chinese airlines from flying over Russia on routes to and from the United States.
The Federal Communications Commission said on Friday that major US online retail websites have removed millions of listings for prohibited Chinese electronics.
China's move on Thursday included adding five new elements as well as dozens of pieces of refining technology to its export-restricting control list.
It would require foreign companies to get special approval for shipping the metallic elements aboard.
Chinese authorities also announced permitting requirements on exports of technologies used in the mining, smelting and recycling of rare earths, adding that any export requests for products used in military goods would be rejected.
China produces more than 90 per cent of the world's processed rare earths and rare earth magnets.
Many are vital materials in products ranging from electric vehicles to aircraft engines and military radars.
with Reuters
