US President Donald Trump has threatened to impose tariffs on an additional $200bn (£151bn) of Chinese goods in a growing trade row.

Mr Trump said the 10% tariffs would come into effect if China “refuses to change its practices”.

The move would be a major escalation of the dispute. World stock markets have suffered sharp falls as a result.

China responded by accusing the US of “blackmail”, raising fears of a full-blown trade war.

Mr Trump insists that China has been unfairly benefiting from a trade imbalance with the US for years.

During the 2016 election campaign, he promised to use tariffs to cut the US trade deficits.

But many economists have warned that tariffs are likely to make products more expensive for US consumers and hurt some of the businesses the administration is trying to protect, which depend on China for parts or assembly.

Asian markets sank on Tuesday in response to the latest news, and European markets also opened lower. Global shares had already fallen on Monday.