The Australian dollar has tumbled in response to an escalation in trade tensions between the United States and China, falling to the lowest level against the greenback in a decade.

The local currency traded at 68.06 US cents by early afternoon on Friday, breaking the lows struck in January 2016 when the currency was hit by market concerns about the strength of China's economy. It had fallen as low as 67.96 US cents earlier in the session.

Excluding a "flash crash" in early January this year, which saw the Aussie fall over 3 per cent in a matter of minutes in holiday-impacted trade, it now sits at levels not seen since March 2009, when markets were stuck in the depths of the global financial crisis.

The Aussie is now at its lowest level since the GFC. Credit:Tim Wimborne

The plunge was sparked by a series of tweets from US President Donald Trump that said the United States will impose additional 10 per cent tariffs on $US300 billion ($440 billion) worth of Chinese imports entering the country from September 1, adding to the 25 per cent tariffs on $US250 billion in imports already in place.