USA stocks slide after threat from Trump to raise tariffs

Yuan Sinks U.S. Stock Futures Tumble on Trade War Markets WrapMore

It rose 10 cents on Saturday to $US70.85 per barrel.

Chinese stock markets tumbled on Monday after US President Donald Trump threatened new tariffs on China, putting a trade deal in doubt.

Cross-Border Trade Impact S&P Global Market Intelligence's trade data firm Panjiva says U.S. import flows are being re-routed.

The increase in USA tariffs on Friday would be the first since Trump imposed 10 percent tariffs on $200 billion of Chinese goods in September, coming on top of 25 percent tariffs on $50 billion of goods enacted earlier past year.

The US president tweeted that tariffs of 10% on certain goods would rise to 25% on Friday, and $325bn of untaxed goods could face 25% duties "shortly".

The yuan slumped as much as 1.3 percent against the dollar, and Chinese shares tumbled more than 5 percent when the market opened after a holiday.

Negotiations about tariffs have been one of the remaining sticking points between the two sides.

President Donald Trump talks to reporters while hosting Slovak Republic Prime Minister Peter Pellegrini in the Oval Office at the White House on May 3.

"Hours after Trump's tweets, CNBC News and The Wall Street Journal reported that Chinese Vice Premier Liu He will likely cancel the trip he had planned for the final round of talks".

A subsequent threat to raise tariffs on the September list of products to 25 per cent from 10 per cent in March was suspended, pending trade talks. While "great progress" has been made in the talks, structural and enforcement issues remained, he said.

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President Trump declared on Monday the U.S. will not be losing to China "anymore", a day after he said he would raise tariffs on the country in a move that sent the stock market plunging over fears of an all-out trade war.

The deficit, which refers to the gap between imports and exports, is growing because the strong US economy is creating demand for Chinese imports.

Trump has threatened to raise the tariffs before, but agreed a truce late previous year with China's president, Xi Jinping, to allow officials more time to negotiate a solution to the trade dispute.

United States media has reported that China is now considering cancelling those talks, led by Vice-Premier Liu He, that were scheduled to resume on Wednesday.

A breakthrough in the trade talks could restore normality, he said.

Optimism that China and the U.S. would reach a deal on trade helped make Shanghai equities the hottest in the world this year, although lackluster corporate earnings and concern Beijing is easing back on stimulus dragged the Shanghai Composite Index down almost 6 percent from its April high before Monday. The president even defanged his own threat to blow up the North American Free Trade Agreement by agreeing to a slightly changed deal with Canada and Mexico and then not even trying very hard to get Congress to ratify the changes.

There was no immediate reaction from China about Trump's announcement.

As late as last Friday, the signs of signing off on a deal looked promising, according to US Treasury Secretary Steven Mnuchin.

Fears about a further escalation caused a slump in world stock markets towards the end of a year ago. Those firms can choose to pass the cost on to their customers through high prices, absorb the cost and lower their profits, or try to negotiate the cost of the goods down.

Trump warned Sunday that he would lift tariffs this Friday on $200 billion of Chinese goods to 25% from the current 10%. "The Tariffs paid to the United States of America have had little impact on product cost, mostly borne by China", he tweeted.

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