"Trump has taken the proverbial sledgehammer to the walnut this morning.by threatening to slap a 25 percent tariff on a mind-boggling $525 billion of Chinese goods by this Friday", said Jeffrey Halley, senior market analyst at futures brokerage OANDA in Singapore.
The administration has repeatedly suggested that the negotiators are making progress. His threat increases pressure on a deal that Trump said has been going "too slowly".
"The 10 per cent will go up to 25 per cent on Friday". Recently, officials from both nations have said that the talks are in their final stages.
Trump said the decision to raise tariffs Friday was a result of prolonged negotiations to end the ongoing trade war between the two countries.
Washington will also soon impose 25 percent tariffs on other Chinese goods worth $325 billion, the president noted.
Two days ago, White House economic adviser Kevin Hassett said the Trump administration is "heartened" to see progress in trade talks with China though some issues still need to be resolved.
"The Tariffs paid to the US have had little impact on product cost, mostly borne by China".
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It is understood that key sticking points include how to police any deal, and whether existing tariffs will be removed or stay in place.
In the bilateral consultations, Washington and Beijing are trying to work out a mutually acceptable trade agreement that would put an end to an nearly year-long tariff war between the world's largest economies.
The next round of talks with a major Chinese delegation is scheduled to start on Wednesday in Washington. Meanwhile, the USA side promised not to escalate the tariffs.
Trump is also demanding that China halt theft of intellectual property and subsidies to state-owned companies. -China trade deficit by fair trade.
The administration has been insisting on a mechanism to ensure that China follows through on any promises to purchase more American goods.
In recent days, USA officials grew frustrated with some of China's backpedaling on some of their earlier commitments, including on the crucial matter of technology transfer, two people familiar with the situation said.
Any sign of an escalation in the months-long trade war is nearly sure to roil financial markets, which have reacted sensitively to developments in the talks between the world's two largest economies.