The attempt lead to a scare among major Asian indices. The move has been reported as an attempt to force additional concessions ahead of final negotiations between Beijing and Washington to end a tit-for-tat trade war.
In a series of tweets on Sunday night, the President warned that he would lift tariffs on Friday on a bundle of Chinese goods to 25 per cent from the current 10 per cent threshold, reactivating a threat he removed months ago just as it appears the two economic super-powers are on their way to a deal.
Trump also warned his administration could tax nearly all of the roughly $500 billion of Chinese exports to the US. Trump's renewed threats came as the US and China gear up for another round of trade talks starting Wednesday.
The barbs from the President affected Asian indices. The Shanghai Composite Index dropped around 5 per cent by midday on Monday, while Hong Kong's Hang Seng Index was down by 3 per cent. Japanese markets were closed for a public holiday. US stocks were also hit. The Dow futures was down more than 500 points on early Monday morning. The broader S&P 500 was set to open down 2.1 per cent. Nasdaq futures were down 2.3 per cent. The Nasdaq includes a large number of technology stocks that could be hit particularly hard by higher tariffs on Chinese products.
In India, the Sensex skittled 362 points lower while Nifty was down by 114 points.
Trump on Sunday also said that talks between the two nations were progressing "too slowly" and suggested that the Chinese were trying to "renegotiate" the deal. This, after the US had already imposed tariffs on $250 billion worth of Chinese goods.
The US President had previously threatened more tariffs, but delayed an increase citing "substantial progress" in trade talks, which had moved far enough along that he predicted a signing ceremony with his Chinese counterpart Xi Jinping at some point soon.
The US has been pressing for a pact that would open business opportunities in China for American companies, require China to buy more American goods and end its practice of forcing American firms to hand over valuable technology and trade secrets as a condition of doing business there.
The Chinese in turn have insisted that Trump drop all of his tariffs before they agree to a deal, a position that has frustrated the President.
Guang Shuang, China's Foreign Ministry spokesperson
A Wall Street Journal report said that China was considering cancelling trade talks that were to be held in a few days with the US. However, China's Foreign Ministry spokesperson Geng Shuang on Monday explained that the administration was bracing for trade-talks and would continue with a previous plan to send a delegation to Uncle Sam's land.
"There have been many times that the US side has threatened to increase tariffs," Geng told the South China Morning Post newspaper when asked about the latest development.
"China's positions are clear and the US side is well aware of them. (We have hoped) to make progress in our trade talks and (we) hope the US side can work together with us and move in the same direction so we can achieve a deal that can benefit both sides.
"Everyone in China and abroad is very concerned about the next round of talks and we are also learning about the relevant changes. The Chinese delegation is preparing to go to the US for the negotiations."
There were high hopes that Vice Premier Liu He's trip to Washington on Wednesday for the 11th round of talks would produce a deal to end the trade war which has ravaged the global economy for almost a year.
Liu could now depart Beijing on Thursday, three days later than previously scheduled, and leave Washington a day later, the South China Morning Post quoted a source, who has been briefed on the latest arrangements, as saying.
Another source said both sides remain committed to a final agreement, but Trump's threat puts the Chinese delegation in a difficult position as any agreement could be perceived by the domestic audience as a capitulation to the White House.
With Agency Inputs