President Donald Trump said on Thursday he would impose a 10 percent tariff on the remaining US$300 billion of Chinese imports starting Sept 1, after negotiators failed to make progress in US-China trade talks, sending shockwaves through US markets.

The levies - which would hit a wide swath of consumer goods from cell phones and laptop computers to toys and footwear - ended a temporary truce in a trade war that has disrupted global supply chains and roiled financial markets for more than a year.

Trump later told reporters he could further ratchet up the tariff rate - even beyond 25 percent - depending on progress in talks with Chinese President Xi Jinping.

“I think President Xi ... wants to make a deal, but frankly, he’s not going fast enough,” Trump said.

The news hit US financial markets hard.

Oil prices plummeted 7 percent, with Brent crude registering the biggest daily percentage drop since February 2016. The benchmark S&P 500, which had been in solidly positive territory on Thursday afternoon, closed down 0.9 percent. Benchmark US Treasury yields also fell.

Retail associations predicted a spike in consumer prices. Target Corp tumbled 4.2 percent, Macy’s Inc fell 6 percent and Nordstrom Inc was down 6.2 percent.

Moody’s predicted the new tariffs would weigh on the global economy at a time when growth is already slowing in US, China and the euro zone.

The tariffs may also force the Federal Reserve to again cut interest rates to protect the US economy from trade-policy risks, experts said.

Trump announced the new tariffs in a series of tweets, faulting China for not stepping up to buy more US agricultural products and criticizing Xi for not doing more to stem sales of the synthetic opioid fentanyl.

“Trade talks are continuing, and during the talks the U.S. will start, on September 1st, putting a small additional Tariff of 10 percent on the remaining 300 Billion Dollars of goods and products coming from China into our Country. This does not include the 250 Billion Dollars already Tariffed at 25 percent,” Trump tweeted.

Asked about the impact on financial markets, he later told reporters: “I’m not concerned about that at all.”

He said the tariff rate could be increased in stages. “The 10 percent is 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.”

Shanghai talks

Trump’s decision came after Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin briefed him on their talks in Shanghai, a White House official said. It was the first face-to-face meeting with Chinese officials since Trump and Xi agreed to a trade ceasefire at a G20 summit in June.

The Shanghai talks ended on Wednesday with little sign of progress, although both countries described the negotiations as constructive and scheduled another round of meetings in Washington in September.

Trump had been pressing Xi to crack down on a flood of fentanyl and fentanyl-related substances from China, which US officials say is the main source of a drug blamed for most of more than 28,000 synthetic opioid-related overdose deaths in the United States in 2017.

Xi had promised Trump at a summit in Argentina in December that Beijing would take action. China had pledged that from May 1 it would expand the list of narcotics subject to state control to include the more than 1,400 known fentanyl analogues, which have a slightly different chemical makeup but are addictive and potentially deadly, as well as any new ones developed in the future.

Talks between the US and China collapsed in May, after US officials accused China of reneging on earlier commitments. The trade dispute escalated as Washington sharply hiked tariffs on US$200 billion worth of Chinese goods and Beijing retaliated.

Trump subsequently threatened to impose 25 percent sanctions on the remaining US$300 billion in Chinese imports, prompting warnings from Walmart and other major U.S. retailers of a sharp spike in consumer prices. Thursday’s tweets indicated those goods would face a lower tariff rate than initially threatened, at least at first.

While the US bemoans the lack of larger Chinese agricultural purchases, Beijing has been pressing Washington to relax restrictions on sales to Chinese telecommunications giant Huawei as it had promised.

The US Department of Agriculture on Thursday confirmed private sales to China of 68,000 tonnes of soybeans in the week ended July 25.

The sale was the first to a private buyer since Beijing offered to exempt five crushers from the 25 percent import tariffs imposed more than a year ago. Soybean futures opened lower on Thursday as traders shrugged off the small amount, and losses accelerated after Trump’s tweets.

Retail impact

The new tariffs will jack up prices for consumers at the start of the back-to-school buying season, four large retail trade associations warned on Thursday.

“President Trump is, in effect, using American families as a hostage in his trade war negotiations,” said Matt Priest, president of the Footwear Distributors and Retailers of America.

Stephen Lamar, executive vice president of the American Apparel & Footwear Association, said his group’s members were shocked that Trump had not allowed the resumed US-China trade talks to proceed further before acting.

The measure will hit US consumers far harder than Chinese manufacturers, who produce 42 percent of apparel and 69 percent of footwear purchased in the United States, Lamar said.

- Reuters