LONDON: Equity trading screens were awash in red on Friday after US President Donald Trump stunned investors by slapping new tariffs on China, cranking up trade tensions between the world's top two economies.

The announcement by Trump on Thursday that Washington would impose 10 percent tariffs on another $300 billion in Chinese goods sparked a broad-based sell-off on Wall Street that was echoed in Asia and Europe on Friday.

News that demand for US exports had weakened across the board underscored concern that trade could become a trouble spot for economies around the world.

Trump's announcement means virtually all of the $660 billion in annual trade of goods between the world's two biggest economies will have tariffs on them, with the new duties to take effect September 1.

The US decision came after trade negotiators held talks in Shanghai this week, the first face-to-face discussions since Trump and Chinese President Xi Jinping agreed to a truce in June.

China warned Friday it would take "countermeasures" if the US followed through on its threat, with the commerce ministry calling the decision a "serious violation" of the June truce.

"Trump sent the market into a tailspin," remarked Alfonso Esparza, senior market analyst at online currency trading platform OANDA.

"So far, the US consumer has been spared from the tariffs on Chinese goods, but as Trump's threats grow in scope, so does the potential impact (as) higher costs will have to be passed down from American companies", he added.

As trading began on Wall Street, the Dow Jones Industrial Average down by 0.5 percent.

Earlier in the day both Hong Kong and Tokyo had given up more than 2.0 percent.

Europe's main markets were down similar amounts in afternoon trading, with Frankfurt and Paris briefly tumbling by 3.0 percent.

"The negative mood across markets suggests that investors are jittery over sizzling trade tensions between the world's two largest economies sabotaging the already fragile global growth outlook," said Lukman Otunuga, senior research analyst at FXTM.

Investors fleeing stocks favoured safe-haven investments such as bonds, pushing the yield on German government 10-year bonds to a new record low of nearly -0.5 percent.

Gold was another beneficiary, climbing to $1,441.47 an ounce in afternoon deals from $1,426.34 a week earlier.

Oil prices also recovered some ground after suffering a rout Thursday as Trump's tariffs announcement fuelled concerns about lower demand.

- Trump 'not concerned'  -

Trump told reporters he was "not concerned... at all" by the negative reaction among investors, saying he had anticipated it.

The US president was disappointed with a cut of a quarter percentage point in interest rates by the US Federal Reserve on Wednesday, which declined to commit to further cuts given the resilient performance of the US economy.

But with tariffs set to hit many consumer goods, the impact of the trade war on the US economy is likely to intensify.

"If President Trump carries on like this he may well get his rate cuts, but at what cost?" asked Michael Hewson, chief market analyst at CMC Markets UK.

US data released on Friday showed that the trade deficit held steady in June even as demand for US goods and services weakened across the board.—AFP