It’s just another manic Monday. Asian markets tanked and the yuan hit an 11-year low after US President Donald Trump ramped up his trade war with China by imposing more tariffs on half-a-trillion dollars worth of imports.

The decision on Friday stunned investors, hammering European and Wall Street stocks, while safe havens such as the yen and gold surged.

To add to the mayhem, Trump also called for US firms to leave China and demanded that the Federal Reserve cut interest rates.

Last week’s tariffs hike was in response to Beijing’s decision to raise levies on imports from the United States worth US$75 billion.

Tariffs on Chinese goods worth $250 billion will jump to 30% and those planned on imports worth $300 billion will increase 15% from October 1.

Equity markets

As the markets in Asia opened after the weekend, China’s yuan fell to 7.1487 to the dollar, its weakest level since early 2008 at the height of the global financial crisis. The drop is likely to ire Trump, who has labeled Beijing a currency manipulator.

“The gloves are coming off on both sides and as such yuan depreciation is an obvious cushion against US tariffs,” Mitul Kotecha, a senior emerging markets economist at Toronto-Dominion Bank, told Bloomberg News.

“As long as China can ensure that yuan weakness is well controlled i.e. it does not provoke strong outflows, expect to see further depreciation in the currency.”

On equity markets, Hong Kong slumped more than 3%, with investors also spooked by violent protests in the city that saw police use water cannon for the first time.

Shanghai lost 1.3% and Tokyo ended the morning more than 2% down.

Sydney, Seoul, Wellington, Jakarta and Taipei all sank more than 1%.

The flight from risk into safer havens saw gold jump to a six-year high around $1,550 per ounce, while the Japanese yen was at its strongest level since the end of 2016.

Fears about the trade war’s impact on demand also rocked oil prices with both main contracts falling more than 1%, extending Friday’s sell-off.

The tariffs news overshadowed Fed Reserve chairman Jerome Powell’s much-anticipated speech on Friday, where he pledged to ensure US growth and pointed to fresh stimulus if inflation softens.

Cold War

He acknowledged the bank has no “rulebook” for dealing with the US-China trade conflict or a new economic Cold War, but did not announce any more rate cuts. This, in turn, sparked outrage from Trump, who blames Powell for holding the economy back.

“As usual, the Fed did NOTHING!” Trump said.

“My only question is, who is our bigger enemy, Jay Powel or Chairman Xi?” Trump said, misspelling the Fed chief’s name and referring to Chinese leader Xi Jinping.

“Referencing the Fed chair as the enemy is, frankly, just par for the course … but referencing President Xi now as the enemy rather than ‘my friend’ is a lot more serious,” Ray Attrill, the head of FX strategy at National Australia Bank said.

“Indeed, the fallout is already apparent in an editorial in Saturday’s state-run People’s Daily, saying China will follow through with retaliatory measures announced Friday and fight the trade war to the end in the face of the US’s failure to keep its promises,” he added.

– with reporting from AFP