President Donald Trump blamed China's President Xi Jinping for a trade deal falling apart between the two countries in the final week. Trump said to President Xi "you had a great deal...& you backed out" in a tweet on Monday.
Following the tweet the Chinese Finance Ministry said China will raise tariffs on $60 billion of U.S. goods is response to Trump's tariff hike.
Trade talks broke down last week after the White House accused China of reneging on key portions of an agreement and then hiked the tariff rate to 25% on $200 billion of Chinese goods on Friday.
President Trump also warned China on Monday not to retaliate to those new tariffs. It "will only get worse!," he wrote, prior to news that Beijing will increase the tariffs to 25% from 10% on June 1.
Trump said Friday that trade talks would continue with China but there are no official meetings planned in the future yet. President Trump warned China in a tweet on Saturday to 'act now' on trade or face a 'far worse' deal in his second term.
White House Economic Advisor Larry Kudlow said Sunday that Beijing invited U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin to engage in talks but travel plans have not been made. Kudlow also said that Trump and President Xi would likely meet at the June G-20 summit in Japan.
Traders reacted negatively on Monday to Trump ratcheting up the rhetoric amid this tenuous time and China's retaliatory tariffs. The Dow Jones Industrial Average dropped more than 700 points, while the S&P 500 was down 2.7% and Nasdaq 100 dropped 3.4%. The Dow lost 1.9% last week as the trade deal fell apart.
China's yuan was set for its worst daily fall in nine months on Monday. The yuan fell 0.8% to 6.9040, its weakest since December 27.