Updated at 5:06 p.m. ET
President Trump announced Thursday that the United States will impose a new 10% tariff on $300 billion worth of products imported from China, saying Beijing had broken some of the promises it made in trade negotiations.
The new tariffs, which are set to take effect Sept. 1, represent another ratcheting up in trade tensions between the countries and sent stocks falling sharply.
Major U.S. stock indexes fell about 1% and the Dow Jones Industrial Average closed down 280 points. Oil prices tumbled about 8% after Trump's announcement on concerns that the tariffs would hurt demand.
The move comes days after U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steve Mnuchin traveled to Shanghai for a brief meeting about trade with Chinese officials. Earlier this week, the White House said the Shanghai meeting was "constructive" and that negotiations were scheduled to resume in September in Washington, D.C.
"When my people came home, they said, 'We're talking, we have another meeting in early September,' " Trump told reporters Thursday. "I said, 'That's fine, but in the meantime until such time as there's a deal, we'll be taxing them.' "
Trump indicated Thursday he was disappointed by the lack of progress in the talks, saying China had failed to follow through on promises to curb the sale of fentanyl and buy more products from U.S. farmers.
"Additionally, my friend President Xi said that he would stop the sale of Fentanyl to the United States – this never happened, and many Americans continue to die!" Trump said in a tweet.
Still, the president tried to strike a more positive tone than he has in the past, saying, "We look forward to continuing our positive dialogue with China on a comprehensive Trade Deal, and feel that the future between our two countries will be a very bright one!"
The president has already imposed 25% tariffs on $250 billion in Chinese imports. In May, Trump had threatened additional tariffs but suspended them at the last minute.
Now, he is going ahead with tariffs after all, though at a lower rate than before.
On Wednesday, the Federal Reserve cut interest rates for the first time since 2008 amid signs that the economies of the United States and other countries are slowing. The central bank also cited the uncertainty created by the standoff with China.
"Certainly, we've seen ... that when there's a sharp confrontation between two large economies, you can see effects on business confidence pretty quickly and on financial markets pretty quickly," Fed Chairman Jerome Powell said in a news conference after the interest rate announcement.
Industry groups said the new tariffs will hurt shoppers and threaten jobs.
"We are disappointed the administration is doubling-down on a flawed tariff strategy that is already slowing U.S. economic growth, creating uncertainty and discouraging investment," David French, vice president of government relations at the National Retail Federation, said in a statement. "These additional tariffs will only threaten U.S. jobs and raise costs for American families on everyday goods."
Matt Priest, head of the Footwear Distributors and Retailers of America, said in a statement: "President Trump is, in effect, using American families as a hostage in his trade war negotiations. Tariffs are taxes and this move will noticeably raise the cost of shoes at retail and will have a chilling effect on hiring in the footwear industry."
Trump has lately indicated that the U.S. can win a trade war with Beijing, pointing out that China's economy has been slowing after a long period of rapid growth.
U.S. officials want China to address the theft of intellectual property, stop subsidizing its companies and open its markets to more U.S. goods.