US President Donald Trump announced Sunday that the United States would raise tariffs on $200 billion of Chinese goods to 25% this week, because trade talks are moving "too slowly".
Shares and oil prices have tumbled after President Donald Trump jolted markets with a threat to raise more tariffs on imports from China, spooking investors who had been expecting good news this week on trade.
Trump made the threat in two tweets, in which he claimed the 25% tariffs on more than $50 billion of technology exports and 10% on over $200bn of goods have been born by China and are "partially responsible for our great economic results".
Trump's comments in tweets came as a Chinese delegation was due to resume talks in Washington aimed at resolving a tariffs battle that has rattled world markets. He also threatened to impose 25% levies on an additional $325 billion of Chinese goods "shortly".
American trade negotiators were in Beijing last week for talks that Treasury Secretary Steven Mnuchin described as "productive", after Trump last month said they were forging an "monumental" and "epic" deal.
The truce helped soothe investors concerns about a further escalation in a trade war between the world's two largest economies, which imposed tariffs on about $360 billion of each other's good previous year.
In China, Hong Kong's Hang Seng index dropped 3.7%, while the Shanghai Composite plunged 5.3%.
Prior to the tweets from the President of the United States, the global market volatility was particularly low.
China has retaliated with $110bn-worth of tariffs on U.S. goods, including agricultural produce such as soya beans, as well as cars, luggage, electronics, housewares and food. It rose 10 cents on Friday to $70.85 per barrel. "It's looking very good", Trump had said.
Goldman Sachs doubled the odds of auto tariffs are coming this year to 20, and lessened the odds it gives to a free trade agreement between the U.S., Canada and Mexico.
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Auto parts supplier Martinrea International fell 2.4 per cent, while construction and engineering firm SNC-Lavalin Group Inc. was down 3.1 per cent.
Trump said the tariffs paid to the USA have had little impact on product cost, mostly borne by China.
By potentially scotching the trip, Beijing would be following up on its pledge to avoid negotiating under threat, it said.
The US officials had previously said that a deal could be reached by Friday.
But Michael Pillsbury, an informal trade adviser to Mr Trump, said he took the president's tweet "at face value".
Economists have blamed the US-China trade war for a slowdown in global growth in recent months. Broadcom's Chinese revenue is 48% of its total and Apple gets almost one-fifth of its revenue from world's second largest economy.
Trump said he is raising some tariffs because the trade talks are going "too slowly".
A breakthrough in the trade talks could restore normality, he said.
But sticking points still remained, including how to enforce any accord and the stumbling block of what Washington sees as Beijing's state-subsidies model which favors China's corporate juggernauts.
Trump's move is a reversal of his decision in February not to increase tariffs from 10 per cent to 25 per cent on $200 billion of goods, thanks to progress in the trade talks.