WASHINGTON—The U.S. Treasury labeled China a currency manipulator after the Chinese central bank let the yuan depreciate, capping a day of trade-war escalations that sparked a global fall in financial markets and fears the clash could stall the U.S.’s economic expansion.

The uncertainty could pressure the Federal Reserve to consider more interest-rate cuts, following its decision last week to lower rates for the first time in more than a decade.

China’s yuan fell as much as 1.9% to a record offshore low of 7.1087 to the dollar in Hong Kong, according to data from Refinitiv, putting the currency on course for its biggest single-day loss against the dollar since August 2015, when Beijing allowed a sudden depreciation.

In mainland China, the yuan also weakened beyond the 7 yuan to the dollar level—which policy makers in recent years have defended—for the first time since 2008.

In addition to the currency move, Beijing said that Chinese companies had suspended purchases of U.S. agricultural products, and that the government has not ruled out putting tariffs on U.S. farm goods purchased after Aug. 3.