Trump announces new tariff hike on Chinese goods, escalating trade tensions

US president Donald Trump announced on Sunday that if a trade deal was not reached he would hike US tariffs on $200 billion worth of Chinese goods

Trump put extra pressure on China to reach a trade deal saying he would hike US tariffs this week and target hundreds of billions more soon.

The move escalated trade tensions between the US and China, taking many by surprise after Trump cited progress in talks on Friday.

'The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!' Trump said in a tweet.

It comes after US trade representative Robert Lighthizer updated Trump with details that China was pulling back from previous commitments, which prompted Trump’s tweet.

Markets reacting

Shortly after Trump’s announcement financial markets reacted negatively. S&P 500 e-minis fell 1.6%, and the Dow futures were down 420 points.

Wall Street stock index futures fell sharply, with the Nasdaq 100 e-minis were down 119 points, or 1.51%, and Dow e-minis were down 358 points, or 1.35%.

AUD/USD fell 0.8% on Monday morning, recovering to $0.6998

Increase in current tariffs

Trump also said he would target a further $325 billion of Chinese goods with 25% tariffs "shortly,"

Analysts say Trump's move could be a negotiating tactic ahead of a new round of talks this week. Trump said tariffs on $200 billion of Chinese goods would increase to 25% on Friday from 10%, despite his decision in February to keep them at the 10% rate.

'The Tariffs paid to the USA have had little impact on product cost, mostly borne by China,’ he tweeted.

Chinese officials will meet with US officials in Washington on Wednesday after the Beijing meeting last week.

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