China on Monday suspended United States warships and military aircraft visits to Hong Kong and sanctioned American NGOs including Human Rights Watch in retaliation against Washington passing two bills supporting pro-democracy protests in the city last week.
Beijing is also set to impose sanctions on certain US -based human rights organizations that have been reporting on the ongoing unrest within the country.
China will impose new diplomatic sanctions against the U.S.in response to Congress's show of support for Hong Kong protesters, the Chinese foreign ministry announced on Monday, but will steer clear of economic sanctions to avoid exacerbating an economic slowdown.
Waving US flags, black-clad protesters marched to the US consulate to thank Trump for signing into law last week legislation supporting their cause, and urged him to swiftly sanction Lam and other officials for suppressing human rights.
Secretary of State Mike Pompeo, speaking to students in Kentucky, said that Hong Kong demonstrators want "what our next generation of Americans wants - they want freedom, the chance to raise a family, to practice their faith in the way that they want".
What effect will the ban have?
She said: "There is a lot of evidence proving that these NGOs have supported anti-China forces to create chaos in Hong Kong, and encouraged them to engage in extreme violent criminal acts and "Hong Kong independence" separatist activities".
Anti-government protesters hold up five fingers for their five demands during the "Lest We Forget" rally in Hong Kong's Kowloon neighbourhood on Sunday. But police fired tear gas after some demonstrators hurled bricks and smoke bombs, breaking a rare pause in violence that has persisted during the six-month-long movement.
In August China rejected requests for visits by the guided missile cruiser USS Lake Erie and transport ship USS Green Bay, but did not give specific reasons.
Hong Kong protesters carrying American flags and banners appealing to US President Donald Trump rallied in the semi-autonomous Chinese territory.
The news comes as the USA continues to increase its presence and military potential in the South China Sea.
"Operationally, from a military point of view, it doesn't really make a difference for the U.S., as they can use many naval bases in the region", Michael Raska, a security researcher at Singapore's Nanyang Technological University, told AFP news agency.
However, it "sends a signal that US-China tensions will continue to deepen", Mr Raska said.
Thousands of protesters took to the streets of Hong Kong, from hardened youthful protesters in black outfits and face masks to parents with their children. Marco Rubio, R-Fla., requires that the USA conducts yearly reviews into Hong Kong's autonomy from Beijing.
The protest in the busy shopping district of Tsim Sha Tsui followed a march by hundreds of people to the USA consulate to show "gratitude" for US support for the demonstrations that have agitated the Chinese-ruled city for six months.