The US formally suspended tariff rises on $£200bn (£150bn) of Chinese goods but hopes of resolving a trade war between the two nations faded, sending global stock markets down for the third day straight on Thursday.
US trade representative Robert Lighthizer pushed back higher import duties which had been due to come in on Friday “until further notice”.
A costly trade war between the two nations, and fears about the rise of protectionism round the world has been casting a shadow over the world economy for months.
Mr Lighthizer warned that Washington will need to maintain the threat of imposing tariffs on Chinese goods for years even if a deal is reached.
“The reality is this is a challenge that will go on for a long, long time. In accordance with the president’s direction, the office of the United States trade representative will publish a notice in the federal register this week to suspend the scheduled tariff increase until further notice,” he said
He also warned that promises from Beijing to purchase more US goods must include a way to ensure they are met.
An early end to a summit between Mr Trump and North Korean leader Kim Jong-un this week also dented confidence in the future of the global economy.
The FTSE 100 fell 0.6 per cent and the pan-European Stoxx 600 was down 0.4 per cent while the Japanese yen and Swiss franc – both safe-haven currencies – gained.
Oil prices fell on Thursday amid weakening factory output in China and Japan and record US crude output.
