Trump asked the United States Trade Representative to identify $200 billion worth of Chinese goods for additional tariffs, at a rate of 10 percent. If China "refuses to change its practices" and insists on continuing with the new tariffs it recently declared, then the additional levies would be imposed on Beijing, Trump said Monday night.
Soon after, the Chinese Commerce Ministry issued a response, stating that the latest threat of more tariffs violates previous negotiations and consensus reached between both the U.S. and China. "The United States has initiated a trade war that violates market laws and is not in accordance with current global development trends," the Commerce Ministry said.
"The strategy now seems a trade war of attrition," said Peter Boockvar, chief investment officer at Bleakley Advisory Group. "I repeat that I get what the end goal is but the means to that end is now going off the rails if this is the current strategy."
"Slower growth and higher inflation is the only result of the current path," he said.
Global equity markets fell sharply on the news. The Stoxx 600, which tracks a broad swath of European stocks, pulled back 0.7 percent while the Dow Jones industrial average declined more than 300 points to erase its 2018 gains.
—CNBC's Nyshka Chandran and Huileng Tan contributed to this report