The president's action came as a surprise, just as USA and Chinese negotiators were concluding a 12th round of what the White House called "constructive" trade talks in Shanghai.
United States stock futures slipped 0.4% in Asian trade after the S&P 500 skidded 0.9% to hit one-month lows overnight, while Pan-European Euro Stoxx 50 futures shed 1.9%. It was the first round of negotiations since talks fell apart in May, after U.S. President Donald Trump accused Beijing of reneging on its commitments and broke the previously declared "truce" by upping tariffs on Chinese goods.
The yen edged up to 107.06 on the dollar after rising 1.3% overnight, its biggest daily gain in more than two years. The 10% tariff will end up impacting a large number of consumer goods and electronic appliances which are imported from China. People close to the administration said they were still planning for those talks to go ahead.
Pompeo - who had assured Southeast Asian partners a day earlier that Washington would not force them to choose sides between the United States and China - used his speech on Friday to portray USA investment as a more benign option.
Trump also threatened to further raise tariffs if Chinese President Xi Jinping fails to move more quickly to strike a trade deal. "More recently, China agreed to buy agricultural product from the U.S.in large quantities, but did not do so", Trump tweeted.
The move is the latest salvo in an escalating trade war between the two countries.
U.S. Secretary of State Mike Pompeo delivers a speech at Siam Society in Bangkok, Thailand, August 2, 2019.
Beijing has imposed tariffs of up to 25 per cent on about $110 billion USA of goods from the United States since the trade war broke out past year.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.6% to its lowest since mid-June while Japan's Nikkei tumbled 2.4%.
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Negotiations are scheduled to resume next month in Washington. Soon after his announcement to impose additional tariff on the import of Chinese products, the stock markets in NY took a plunge.
Moody's Investors Service is warning that Trump's planned tariffs will prove to be an economic drag.
Analysts say the tariffs increase pressure on the U.S. Federal Reserve to ease policy, with the market now pricing in a 60% chance of a 50 basis point cut by the October meeting.
"He's tightening the screws now, so they don't just play a waiting game", Moore said.
"The 10 per cent is a for a short-term period and then I can always do much more or I can do less, depending on what happens with respect to a deal", Trump said at the White House, adding, "it could be lifted up to well beyond 25 per cent".
"I think they want to try and make a deal with us, but I'm not sure", Trump said in a Thursday evening rally in Cincinnati.
Gibbs said that as market access in China "remains unnecessarily restricted", the United States should continue its dialogue with Beijing, and "also work with like-minded countries to persuade China that fair and reciprocal trade and investment benefits all".
Non-farm payrolls rose by 164,000 in July the U.S. Bureau of Labor Statistics said today.
China's spokesperson at the foreign ministry, Hua Chunying, said at a daily press briefing that Beijing would have to take countermeasures if the US was committed to putting more tariffs on Chinese goods, Reuters reported.
Yet Trump pointedly did not call off the talks (although China very well might in response to the latest broadside).