Trump vows new tariff hike on Chinese goods, escalating tension in trade talks

The move marked a major escalation in trade tensions between the world's two largest economies and a shift in tone from Trump, who cited progress in talks as recently as Friday.

But a less than rosy update from United States Trade Representative Robert Lighthizer, including details that China was pulling back from some commitments it made previously, prompted Trump's decision and jab on Twitter at Beijing.

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Financial markets reacted negatively. S&P 500 e-minis fell 1.6%, while Dow futures were down 420 points or 1.6%.

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New fines will now hang over those talks, assuming they take place as planned. Trump said tariffs on $200 billion of goods would increase to 25 percent on Friday from 10 percent, reversing a decision he made in February to keep them at the 10 percent rate after progress between the two sides.

The president also said he would target a further $325 billion of Chinese goods with 25 percent tariffs "shortly," essentially targeting all products imported to the United States from China.