With a sharp fall of over 350 points on the BSE Sensex, and over 100 in Nifty on Friday, Indian indices erased all their 2019 gains.
An increase of about 2% in crude prices and a further decline in auto sales in July also doomed sentiment in the market. Subdued quarterly earnings and clear signs of an economic slowdown are also impacting the market in a big way.
Chinese stocks were also down over 1.5% in early trading, while Hong Kong’s Hang Seng dropped 2.2%.
Trump’s announcement came after negotiators from the US and China failed to reach any significant agreement over trade issues on Wednesday.
Giving further push to Trump's barb against China, US Secretary of State Mike Pompeo on Friday criticised Beijing for its "decades of bad behaviour" that has impeded free trade.
"We want free and fair trade, not trade that undermines competition", Pompeo told a regional youth leadership programme in the Thai capital Bangkok.
However, China's Foreign Minister Wang Yi said in Bangkok that new tariffs from the US are not a "correct or constructive way to resolve the trade dispute" between the two countries.
The United States and China have been engaged in a trade war since June 2018, when Trump announced he was imposing tariffs on $50 billion worth of Chinese imports in a bid to balance the trade deficit. Since then, the two countries have imposed several tit-for-tat rounds of tariffs.
In June, Trump and Xi agreed to a 90-day truce during in which they would refrain from imposing additional tariffs and re-launch negotiations in an attempt to resolve the trade war.