Staying true to his reputation for unpredictability, United States President Donald Trump has now threatened to impose new tariffs of 10 per cent on US$300 billion (S$414 billion) worth of toys, television sets and other imports from China starting next month, escalating the trade war between the world's two largest economies. Added to the 25 per cent tariffs he slapped on US$250 billion of Chinese goods, the latest move, if he follows through, would make almost all of China's direct exports to the US subject to tax at higher levels. Not surprisingly, skittish financial markets have taken this poorly; Asian and European shares fell on the news, which comes amid a slew of discouraging reports of a gathering economic slowdown.

For most retailers, including those in the US already buffeted by the surge of online shopping and other challenges, Mr Trump's decision could be disastrous if he does follow through on the threat. His statements that tariffs have not caused prices to rise notwithstanding - but with the end-of-year festivities to come - toy prices will rise by about 17 per cent, shoes by 8 per cent, clothing by 5 per cent, and furniture and television sets by 4 per cent, says a report prepared for the US National Retail Federation. The Consumer Technology Association says laptop and tablet prices are expected to rise between US$50 and US$120, and smartphones by an extra US$70. Small wonder that Apple's stock price has fallen more than 5 per cent since Mr Trump's tweet. His Twitter announcements may appear to carry a triumphalist air. In fact, they may be signs of frustration that things are not going well in the trade negotiations with China. Last week's talks in Shanghai were too brief to be productive: The US team led by Trade Representative Robert Lighthizer was there for a little over 24 hours, and their itinerary consisted of a dinner the night they arrived. Gearing for re-election, Mr Trump is guessing, accurately perhaps, that the Chinese are not ready to give him anything he can take to potential voters as a diplomatic victory. He seems to be calculating that confrontation with China may well be his ticket to winning a second term.