In a series of tweets on Monday, Trump said he would increase tariffs from 10% to 25% on $200bn worth of Chinese goods this Friday, adding an extra $325bn of goods will be “shortly” slapped with 25% tariffs as well.
Trump said on Twitter: “For 10 months, China has been paying tariffs to the US of 25% on $50bn of high tech, and 10% on $200bn of other goods. These payments are partially responsible for our great economic results.
“The 10% will go up to 25% on Friday. $325bn of additional goods sent to us by China remain untaxed, but will be shortly, at a rate of 25%. The tariffs paid to the US have had little impact on product cost, mostly borne by China. The trade deal with China continues, but too slowly, as they attempt to renegotiate. No!”
Subsequently, US trade representative Robert Lighthizer confirmed tariffs on Chinese goods would be raised at midnight on Friday.
On the news, China’s blue-chip CSI 300 index, made up of Shanghai and Shenzen-listed stocks, plummeted 5.8%, its worst day since February 2016, while the Shanghai Composite index also fell over 5%.
On Monday, Europe’s largest pure-play China ETF, the £905m Xtrackers MSCI China Index UCITS ETF fell 4.3%, while the £466m iShares MSCI China A UCITS ETF plunged 6.4%.
Meanwhile, around 1,000 mainland firms fell the maximum allowed 10% daily limit, according to Reuters.
Beijing officials are still planning to fly out to Washington, despite China’s vice-premier and top trade negotiator Liu He originally due to head to the US on Monday.
Mohammed Kazmi, portfolio manager at UBP, commented: “We see the end game as still being Trump looking to agree on a deal with President Xi Jinping. With talks set to be fluid and volatile, this has supported our view of holding more balanced portfolios.”