The future of one of the world’s biggest trading relationships hangs in the balance after US President Donald Trump escalated the tariff war with China by imposing steep duties on imports from the country.

Investors are hopeful that U.S.-China trade talks this weekend will cool a trade war between the world's two largest economies and dispel some of the uncertainty clouding financial markets, though few expect a major breakthrough just yet.

Shipments of goods to the United States plunged by 21 percent in April, but spiked to Asia as President Trump imposed sky-high tariffs on China.