Global markets and oil prices fell after US President Donald Trump ordered American companies to exit China after Beijing unveiled retaliatory tariffs on $75bn (€67bn) in US goods, throwing a new twist into the bitter trade war between the world’s two largest economies.
"We don’t need China and, frankly, would be far better off without them. The vast amounts of money made and stolen by China from the United States, year after year, for decades, will and must STOP," Mr Trump tweeted.
"Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA."
It’s unclear what legal authority Mr Trump would be able to use to compel US companies to close operations in China or stop sourcing products from the country.
The US president said he also was ordering shippers including FedEx, Amazon.com, UPS and the US Postal Services to search out and refuse all deliveries of the opioid fentanyl to the US.
China said it would impose retaliatory tariffs on $75bn of US goods, targeting crude oil for the first time and renewing punitive duties on American-made cars. The latest salvo was in response to President Trump’s plans to impose 10% tariffs on a final $300bn list of Chinese-made consumer goods on September 1 and December 15, including mobile phones, toys, laptop computers and clothing.
US stocks fell sharply on fears escalation of the trade war could tip the US economy into recession. The main European markets were also down. Oil plunged nearly 2% to just under $59 a barrel.
President Trump also attacked Federal Reserve chair Jerome Powell after he said the US central bank will "act as appropriate" to keep the American economy healthy. Mr Powell, speaking at the start of the Fed's annual think-in at Jackson Hole, Wyoming, did not say how fast the Fed might cut interest rates.
Mr Powell, under pressure from Mr Trump and markets to cut rates, characterised the US economy as being in a "favourable place" but facing "significant" risks, especially what Fed officials have described as the harmful effects of the White House’s trade war with China.
“My only question is, who is our bigger enemy, Jay Powel or Chairman Xi,” Mr Trump tweeted.