Economic security

Markets tumble after Trump threatens to dramatically increase China tariffs

Global financial markets have been sent into a tailspin after Donald Trump risked jeopardising delicate trade talks with China by unexpectedly saying he would raise tariffs further on Chinese goods this week.

Stocks in China fell almost 6% on Monday morning as investors in Asia Pacific were caught off guard by the US president’s tweets and the alarm intensified as reports indicated that the government in Beijing might pull out of this week’s scheduled talks.

Although markets are closed in Japan and London on Monday, futures trading indicated that Wall Street would fall 2% when trading opens later on Monday. Oil prices – a benchmark for global trade – also plunged and the Chinese yuan tumbled.

Traders feared that Trump’s threat to raise tariffs on $200bn of Chinese goods to 25% on Friday from 10% and then target a further $325bn of Chinese goods could destabilise global financial markets that had been boosted by what appeared to be encouraging progress in the negotiations.