US pre-open: Heavy losses expected as Trump ramps up China trade war

US stocks looked set for heavy losses at the open on Wednesday amid escalating tensions between the US and China, after President Trump said his administration will slap tariffs on an additional $200bn of Chinese imports.

At 1210 BST, Dow Jones Industrial Average and Nasdaq futures were down 0.8%, while S&P 500 futures were 0.7% lower.

Overnight, US officials released a list of thousands of Chinese imports that will be hit with the additional tariffs, including hundreds of food products, tobacco, chemicals, coal, steel and aluminium. The list also includes a number of consumer goods, including car tyres, bicycles, furniture and handbags, that are due to be hit by a 10% tax as early as September, on top of the 25% tariffs on $34bn worth of Chinese imports that came into effect last week.

China will definitely take trade counter-measures and protect its "legitimate rights", the Ministry of Foreign Affairs told reporters.

Oanda analyst Craig Erlam said: "While this announcement has been expected ever since US President Donald Trump first hinted at such a response to Chinese retaliatory measures, it is a stark reminder that common sense is not prevailing - as many hoped - and the risk of a full blown trade war is very real. In instructing US trade representative Robert Lighthizer to start preparations for the new range of tariffs, Trump is showing that he is not bluffing and is willing to take this all the way which is very worrying.

"Trump’s relationship with US’ allies will certainly come into focus in the coming days. The Nato meeting over the next 48 hours will certainly be a tasty affair with Trump having repeatedly and publicly bashed other members for their contributions, particularly Germany who the US President has also targeted on trade. He will then head to the UK which is facing something of a crisis itself and hoping it can rely on its 'special relationship' to agree a good trade deal in the future and make a success of Brexit."

In opening remarks in a meeting with Nato general secretary Jen Stoltenberg at the summit in Brussels, Trump accused Germany of being "captive" to Russia and described the relationship between the two countries as "inappropriate".

"I think it is very sad when Germany makes a massive oil and gas deal with Russia," Trump said. "We are supposed to be guarding against Russia, and Germany goes out and pays billions and billions dollars a year to Russia."

In corporate news, 21st Century Fox was likely to be in focus after upping its offer for the Sky shares it does not already own to £14 per share, trumping the latest offer from Comcast by around 12%. The offer for the London-listed broadcaster, which is up from a previous £10.75 per share, remains subject to the approval of the UK Secretary of State, which is due to make a final decision by Thursday.

Elsewhere, shares in technology group Nvidia Corp looked set to be active after it announced a partnership with Daimler and Bosch to test robot taxis late on Tuesday.

Facebook was likely to come under pressure as it emerged the company will be fined £500,000 by a UK watchdog over the Cambridge Analytica scandal.

On the data front, the producer price index for June is at 1330 BST, while wholesale inventories are at 1500 BST.