US President Donald Trump has announced he will impose 10 per cent tariffs on $US200 billion worth of Chinese imports.

But in a last-minute reprieve, he spared smart watches from Apple and other consumer products like bicycle helmets and baby car seats from the tariffs.

Mr Trump warned, in a statement, that if China takes retaliatory action against US farmers or industries, "we will immediately pursue phase three, which is tariffs on approximately $US267 billion of additional imports".

Markets at 7:30am (AEST): ASX SPI 200 -0.1pc at 6,179, ASX 200 (Monday's close) +0.3pc at 6,185

ASX SPI 200 -0.1pc at 6,179, ASX 200 (Monday's close) +0.3pc at 6,185 AUD: 71.78 US cents, 54.55 British pence, 61.42 euro cents, 80.29 Japanese yen, $NZ1.09

AUD: 71.78 US cents, 54.55 British pence, 61.42 euro cents, 80.29 Japanese yen, $NZ1.09 US: Dow Jones -0.4pc at 26,062, S&P 500 -0.6pc at 2,889, Nasdaq -1.4pc at 7,896

US: Dow Jones -0.4pc at 26,062, S&P 500 -0.6pc at 2,889, Nasdaq -1.4pc at 7,896 Europe: FTSE flat at 7,302, DAX -0.2pc at 12,096, CAC -0.1pc at 5,349, Euro Stoxx 50 flat at 3,346

Europe: FTSE flat at 7,302, DAX -0.2pc at 12,096, CAC -0.1pc at 5,349, Euro Stoxx 50 flat at 3,346 Commodities: Brent crude -0.1pc at $US78/barrel, spot gold flat at $US1,201.06/ounce, iron ore +0.7pc at $US68.14/tonne

Collection of tariffs on the long-anticipated list will start on September 24, but the rate will increase to 25 per cent by the end of this year.

This will allow US companies some time to adjust their supply chains to alternate countries, a senior administration official said.

Apple and tech reprieve



The Trump administration's proposal for $US200 billion worth of tariffs drew protest from technology companies earlier this year.

Trade war hard to avert We shouldn't underestimate the seriousness of the trade war unfolding between the US and the rest of the world, writes Stephen Kirchner. Read more Read more

But the final list of taxed devices described by the official avoids many big consumer brand names and products.

Smart watches and devices that use bluetooth wireless communications, the technology behind Apple's AirPods and other products that work with smartphones, will be excluded from the new tariff list.

The new list would spare fitness trackers from Fitbit, which had said in a comment letter to regulators that the tariffs would compromise its own investment in the United States.

Apple had said the US tariffs would affect prices for a "wide range" of Apple products, including its Watch, in a letter commenting on administration proposals earlier this month.

"Our concern with these tariffs is that the US will be hardest hit, and that will result in lower US growth and competitiveness and higher prices for US consumers," Apple said in a letter commenting on the proposal.

After Apple's comments, Mr Trump said in a tweet said that there was an "easy solution" for Apple to avoid tariffs.

"Make your products in the United States instead of China. Start building new plants now," he tweeted on September 8.

Market reaction

Wall Street tumbled ahead of Mr Trump's announcement, with consumer and technology stocks taking the biggest hit.

Mr Trump's announcement had been anticipated for several days, amid his deep disagreements with Beijing over trade and intellectual property policies.

The US President also said he had great respect for Chinese President Xi Jinping, but the US goods trade deficit with China was too large and "we can't do that any more".

China said it will retaliate if the United States goes ahead with these tariffs, and there is a risk it may cancel their upcoming trade talks.

The tech-heavy Nasdaq index dropped sharply by 1.4 per cent, while the benchmark S&P 500 fell by 0.6 per cent.

The industrial-skewed Dow Jones index was down 92 points, or 0.4 per cent, to 26,062.

Apple shares fell 2.6 per cent, amid concerns it might be caught in the middle of an escalating trade war.

Amazon stocks dropped by 3.2 per cent.

China is one of Apple's largest markets, and the tech giant said increasing tariffs on Chinese goods could harm its business.

Dollar climbs on weaker greenback

The Australian share market is expected to fall in early trade — given the weak lead from Wall Street, and with ASX futures trading slightly lower.

This led to the Australian dollar rising modestly to 71.8 US cents, amid a weaker greenback overnight.

However, it has fallen slightly to 54.5 British pence and 61.4 Euro cents.

In local economic news, the Bureau of Statistics will release its second-quarter residential house price index, which is expected to show a fall in values.