US stock futures tumbled more than 1% late Thursday.

The drop came after news that President Donald Trump is considering an additional $100 billion in tariffs on China.



Risk aversion has reared its head in early Asian trade on Friday following news that Donald Trump has asked the US Trade Representative (USTR) to consider an additional $100 billion in tariffs on Chinese imports.

“In light of China’s unfair retaliation, I have instructed the USTR to consider whether $100 billion of additional tariffs would be appropriate under section 301 and, if so, to identify the products upon which to impose such tariffs,” Trump said in a statement released by the White House.

Financial markets have been roiled on the news with US stock futures tumbling more than 1%, completely reversing all of the gains achieved on Thursday on an apparent easing in trade concerns among investors.

The above 5-minute tick chart of Dow futures tells the story since the news broke.

The Japanese yen, US bond futures and gold — all safe haven assets — have rallied on the news while the Australian dollar is down by over 0.3%, adding to the losses seen on Thursday.

While some deem recent moves from the US as a negotiation tactic to help reduce trade imbalances between China and the US, it’s clear that investors are growing increasingly nervous about the potential for this tit-for-tat spat to become something far more significant.

If recent form is any guide, China may well announce new proposals of their own on new tariffs in the days ahead.