US trade tensions with China escalate as Trump prepares to impose new round of tariffs

US markets fell on Monday over concerns Trump will impose more tariffs if talks with Chinese President Xi Jinping fail to ease tensions

The US is reportedly preparing to announce a new round of tariffs on Chinese imports, if talks between Donald Trump and Xi Jinping, scheduled for next month, do not ease tensions.

The Dow Jones, Nasdaq and S&P 500 all tumbled on Monday as tensions between the US and China flared up once again.

However, most Asian markets rose on Tuesday as traders viewed the weaker yuan as an indication that Chinese exports can withstand further levies.

Washington has imposed tariffs on billions of dollars worth of Chinese goods this year, with Beijing responding in kind.

Most recently, Mr Trump imposed sanctions on $200bn (£153bn) worth of Chinese goods, including handbags and bicycle tires, while China retaliated by imposing levies on US goods including soybeans.

Fears of a full-blown trade war between the two nations led the World Trade Organisation to warn earlier this month that the tensions pose a threat to the global economy.

Asked about a new tariff announcement, White House press secretary Sarah Sanders told a briefing on Monday: “I’m not going to get ahead of the president’s meeting, and I hope it goes well.”

Another White House spokeswoman said there was “nothing new at this time” regarding tariffs on Chinese goods.

US-China Business Council senior vice president Erin Ennis said that it would not be a surprise to see Trump move toward announcing more tariffs, given his repeated threats to do so. But she said the group representing US companies doing business in China was urging both sides to better use the time before the Trump-Xi meeting to figure out how progress can be made on substantive issues.

“Our hope is that cooler heads will prevail and they will start having substantive discussions that will address the Americans’ concerns and start lifting the tariffs,” Ms Ennis said.

Additional reporting by newswires