Trump says China has used a state-directed economic model to harm the American economy

President Donald Trump announced Thursday he will hit China with punitive tariffs on another $300 billion in goods, escalating his trade war after accusing Beijing of reneging on more promises.

The sudden deterioration meant the world's two largest economies have now erected trade barriers covering virtually all of their $660 billion in annual two-way merchandise trade -- a prospect that confirmed economists' fears and sent shudders through Wall Street.

The 10 percent duties will take effect September 1, and come on top of the 25 percent tariffs on $250 billion in imports already in place.

Trump said on Twitter that Beijing had agreed "to buy agricultural product from the US in large quantities but did not do so."

"Additionally, my friend President Xi said that he would stop the sale of fentanyl to the United States -- this never happened, and many Americans continue to die!" Trump said, referring to the highly potent and addictive opioid.

After resuming face-to-face talks in Shanghai this week, trade negotiators were set to reconvene in Washington in early September for another round of discussions, just after the new tariffs take effect.

Up to now, US officials had worked prevent tariffs from hitting popular consumer items but the duties will soon cover the vast expanse of everyday Chinese-made goods and consumer electronics -- mobile telephones, baby carriages, tampons, watches and toys.

While other parts of the US economy have begun to slow, the dominant retail sector has been a bright spot, helping bolster growth despite the general slowdown in most other industrialized nations.

Wall Street dove into the red following Trump's announcement, with retailers hit particularly hard. The Dow Jones Industrial Average was down 1.1 percent shortly after 1900 GMT.

Even so, Trump seemed upbeat: "We look forward to continuing our positive dialogue with China on a comprehensive Trade Deal, and feel that the future between our two countries will be a very bright one!"

US-China trade talks this year have alternated between progress and disaster, appearing to collapse in May only to be revived two months later after a meeting in Japan between Trump and Xi Jinping, his Chinese counterpart.

American officials accused Beijing of reneging on core commitments they had previously made during the talks.

Trump says China has used a state-directed economic model to harm the American economy, unfairly subsidizing production and stealing intellectual property.

But economists say the trade war has increasingly undermined the global manufacturing sector and sapped business sentiment, threatening the world's economy at a time when it is already on the wane.