The FTSE 100, which had edged up 11 points in early trading, fell almost 18 points to 7,666.00 after Donald Trump told CNBC's Joe Kernen in a Squawk Box interview today that he was prepared to tax all of the $505.5 billion of imports from China. "Look, I'm not doing this for politics". China accused American officials of making false accusations Thursday as it fired back against a claim President Xi Jinping is blocking talks with the U.S. Earlier, White House Economic Adviser Larry Kudlow said Xi has no intention of making a deal over trade with the Trump administration.
So far, the USA has put tariffs on $34 billion of Chinese goods.
The yuan dipped to a 12-month low of 6.8 to the dollar, off by 7.6 percent since mid-February.More news: Trump Blasts Fed Rate Hikes Again, Says Strong Dollar Hurts U.S.
Trump has repeatedly claimed that the US has been taken advantage of by China on trade.
"I don't want them to be scared".
The magnitude of the imbalance has continued into 2018, with Chinese imports totaling $205 billion in the first five months of the year and the deficit reaching $152 billion.
There is already pushback in the USA from businesses that will take a hit in an escalating trade war.More news: Mobile adds $5 LTE global data pass as free roaming spreads
Earlier this month, the U.S. imposed 25% tariffs on $34bn of Chinese imports.
In excerpts of the interview released yesterday Trump had broken with the long-established executive branch practice of not commenting on the Federal Reserve's decisions out of respect for its independence.
Its rate increases are meant to prevent the economy from overheating and igniting high inflation - but the hikes also make borrowing costlier and can weaken the pace of growth.More news: Sunken Russian warship with gold worth $130B found after 113 years