This morning, the Asia Pacific stock market plunged in red because of the escalating US-China trade tension. Last night, US President Donald Trump announced a tax increase of US $ 200 billion of Chinese goods to 25% from Friday, an unexpected move when the trade agreement between the two countries is said to be “optimistic”.

In China, the Shanghai Composite and Shenzhen Component indexes all fell more than 3%, while Shenzhen Composite plunged about 4%. In Australia, the ASX 200 index also lost 1.25% because most sectors fell. The MSCI Asia – Pacific Index also decreased by 1.53% as of 8:30 am this morning. Today, the Korean and Japanese markets have not been affected because of closed holidays.

Meanwhile, in the US market, the future DJIA index also lost over 500 points from last night. The future S&P 500 and the future Nasdaq 100 also dropped to double digits when the market opened today.

Last night, Mr. Trump announced on Twitter that it will raise taxes to 25% with 200 billion USD of Chinese goods from the current 10%. This policy will be applied from May 10. Besides, he also threatened to apply 25% to 325 billion USD of Chinese goods. Right after Trump’s statement, this morning, China is also considering canceling trade talks with the US this week, according to CNBC sources.

“Trump’s statement expressed dissatisfaction with China’s speed of trade negotiations in the context of Beijing’s efforts to renegotiate,” said Rodrigo Catril, a senior foreign exchange strategist at National Australia Bank. According to Catril, an increase in tariffs will be bad news for risky assets and threaten the prospect of global recovery.