Trump said tariffs on $200bn of goods would increase to 25 percent on Friday from 10 percent, reversing a decision he made in February to keep them at the 10 percent rate after progress between the two sides.
To pressure China, Trump has even threatened to slap tariffs on all Chinese products entering the USA - they were worth $539.5 billion past year.
In his tweets, Trump also threatened to slap tariffs on another $325 billion in Chinese imports, covering everything China ships annually to the United States.
The report here helped to see USD/JPY hit a session high of 110.85 from around 110.65-70 levels earlier as China offer some glimmer of hope for a trade deal to still come to fruition.
In Hong Kong, the Hang Seng Index fell by around 3.2% or 1,000 points as fears continued that China would call off trade talks after Trump's announcement on Sunday.
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But Reva Goujon, vice president for global analysis at Stratfor, suggested that Trump's move could be a ploy to help get negotiations over the line. That's emboldened trade hawks within the Trump administration to push for a harder line, including the raising of tariffs, the people said.
Last week, industry sources said they believed the talks were in the endgame and Mnuchin had said he hoped the U.S. negotiating team would soon be able to recommend a deal to Trump or tell him that one could not be reached. The U.S. releases the April CPI report Friday.
- Mr Trump is considering tariffs of around 25 per cent on imported cars and auto parts, based on a US Commerce Department study of whether such imports threaten US national security.
The shockwaves rocked China's key mainland markets with Shanghai plunging by more than 5% to 2,918.65 points and Shenzhen down by almost 6%.
- 20 per cent to 50 per cent tariffs on imported washing machines, imposed on January 22, 2018 as a "global safeguard" action to protect U.S. producers Whirlpool Corp and GE Appliances, a unit of China's Haier Electronics Group Co Ltd.
"The risk of an all-out U.S". The Tariffs paid to the US have had little impact on product cost, mostly borne by China.
In Beijing, news of Trump's plan to hike tariffs was met with disbelief and anger. China has suspended a 25 per cent duty on USA auto imports during their trade negotiations.
The negotiating period was prolonged in March after officials from both sides said trade talks reached a breakthrough.
White House economic adviser Larry Kudlow told Fox News that the US President's tweet was a warning to the Chinese.