President Donald Trump has announced the US will apply a new tariff of 10% on about $300 billion-worth of products from China.
Mr Trump tweeted amid that negotiations will continue. But he blamed China for not following through on stopping the sale of fentanyl to the United States or purchasing large quantities of farm goods such as soybeans.
Stocks immediately tumbled on the news. The Dow Jones Industrial Average, which had been up nearly 300 points earlier, was down nearly 200 points soon after Mr Trump’s tweets.
The US has already applied tariffs of 25% on $250 billion-worth of goods from China.
Mr Trump’s threats come after a US delegation returned to Washington from what the White House described as “constructive” trade talks.
The negotiations were expected to resume in Washington in September, though exact dates were not announced.
Mr Trump issued the tariff threat in a series of tweets. He also tweeted: “We look forward to continuing our positive dialogue with China on a comprehensive Trade Deal, and feel that the future between our two countries will be a very bright one!”
The world’s two biggest economies are locked in a trade war over US allegations that Beijing uses predatory tactics – including stealing trade secrets and forcing foreign companies to hand over technology – in a drive to overtake American technological dominance.
Talks had broken down in May after the United States accused the Chinese of reneging on earlier commitments.