NEW YORK (Reuters) - U.S. President Donald Trump sent financial markets reeling on Thursday when he announced additional tariffs on Chinese products, as traders worried not only about the escalation of the trade war but also the effect on the independence of the U.S. central bank.

Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., July 31, 2019. REUTERS/Brendan McDermid

A more than 1% gain in U.S. stocks evaporated within minutes, U.S. crude fell as much as 8% and emerging market stocks tumbled to a six-week low.

Trump moved to impose a 10% tariff on $300 billion in Chinese imports starting next month, with a list that includes consumer goods ranging from cell phones and laptop computers to toys and footwear.

The trade war has disrupted global supply chains and roiled financial markets for more than a year. Thursday’s sharp markets reaction to Trump’s tweeted announcement added to already heightened volatility a day after the U.S. Federal Reserve cut interest rates for the first time in over a decade, in what was dubbed a “hawkish rate cut.”

After the Fed lowered its benchmark rate by 25 basis points on Wednesday, Chairman Jerome Powell said the central bank’s move was “not the beginning of a long series of rate cuts.”

Trump said he was disappointed in Powell after he had called for a more dovish stance at the Fed, but his tariff announcement had the effect he wanted on the outlook for interest rates. Traders have raised the odds for two more interest rate cuts by year’s end, and are increasing bets the Fed will need to ease policy further next year to offset risks from the escalating trade war.

“Obviously more tariffs are a negative just in terms of trade and the global economy. But also it looks like the president is bullying the chairman of the Federal Reserve in order to wage his trade war, so that should not play well with the market. The market should not appreciate that,” said Michael O’Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut.

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After rising more than 1% intraday, the Dow Jones Industrial Average fell 280.85 points, or 1.05 percent, to 26,583.42, the S&P 500 lost 26.82 points, or 0.90 percent, to 2,953.56 and the Nasdaq Composite dropped 64.30 points, or 0.79 percent, to 8,111.12.

The Wilshire 5000 total U.S. market index lost $325 billion in market capitalization.

MSCI’s gauge of stocks across the globe shed 0.72 percent after having risen 0.5% earlier in the session.

Emerging market stocks lost 1.20%. Futures in Japan’s Nikkei lost 1.50 percent.

The trade war between the world’s two largest economies has been a lingering weight on oil prices, and the market sharply reversed its recent run-up.

“The U.S.-China trade war has damaged the energy demand outlook greatly, already, and this will only add to those concerns,” said John Kilduff, partner at Again Capital Management. “The trade war is clearly far from over.”

U.S. crude fell 6.98 percent to $54.49 per barrel and Brent was last at $61.09, down 6.09 percent on the day.

Commodities tumbled across the board, with the CRB index down 3.2%, its largest daily decline since November 2014.

U.S. Treasury yields across all maturities fell sharply, with the benchmark 10-year note hitting its lowest since November 2016.

“Trump’s threat of more tariffs is going to be a continued negative factor for the global economy. Treasuries (prices) should be able to maintain this support,” said John Canavan, lead analyst at Oxford Economics in New York.

The 10-year note last rose 1-3/32 in price to yield 1.9003 percent, from 2.021 percent late on Wednesday.