Malcolm Turnbull is hopeful the US and China can de-escalate tensions to avoid a full-blown trade war.
China increased tariffs by up to 25 per cent on 128 US products including frozen pork and wine, ramping up a dispute between the world's biggest economies in response to US duties on imports of aluminium and steel.
"No one wins out of a trade war, that's for sure," the prime minister told reporters in Brisbane on Tuesday.
Mr Turnbull looks forward to the US and China negotiating an agreement.
"It is really important that we maintain free trade, open markets, that has been the foundation of the prosperity we have all enjoyed, especially in this region," he said.
China is moving swiftly with retaliatory action amid escalating trade tension with the US.
In response to China's move, Washington said Beijing's subsidies and overcapacity were behind the action on steel.
US President Donald Trump is separately preparing to impose tariffs on more than $US50 billion ($A70 billion) of Chinese goods following an investigation under US trade laws.
The US administration says China has systematically misappropriated American intellectual property, an allegation China denies.