With American job gains powering ahead, signs of stabilization in China and subdued inflation keeping the lid on monetary tightening, all the latest signs were pointing to a return of Goldilocks conditions for the global economy. At least, until midday Sunday in Washington.

The latest threat by U.S. President Donald Trump to jack up tariffs on Chinese goods could upset the “not too hot, not too cold” conditions that recently propelled both stocks and bonds around the world. The durability of the equity rally is now in question, with shares tumbling across Asia and U.S. equity futures sliding.

Analyst teams at Bank of America Corp., Citigroup Inc. and Unicredit SpA had all published research notes flagging the chances of a Goldilocks return in the run-up to the Trump tweets. Now the danger is that saber-rattling on trade will escalate again, as U.S. negotiations loom with the European Union and Japan, along with a decision on car tariffs.

“It’s going to mean that investors will be very focused on the trade issues even beyond China,' Joyce Chang, chair of global research at JPMorgan Chase & Co., said in an interview on Bloomberg Television. “That’s what’s going to actually move the markets even more than some of the other issues that have been in play and in discussion last week -- like the Fed,” she said.

The tariff warning followed weeks of a steady drum-beat of reports indicating that the world’s two largest economies were resolving their differences on trade. Expectations were rising that a deal would be struck during the upcoming round in Washington, with a high-level Chinese delegation due on Wednesday.

Trade has yet to recover fully from the pall cast by the escalation in tariffs last year, with key export economies from the euro area to Japan and South Korea still struggling. Any renewal in tensions could wreck the outlook for an upturn.

Goldman Sachs Group Inc. sees a 40 percent chance that Trump will, as threatened, raise tariffs on $200 billion worth of Chinese goods to 25 percent from 10 percent. While the U.S. bank still thinks an increase will be narrowly avoided, it also warned that higher duties would hit hard.

“It’s the uncertainty effect that’s the big issue here,” Andrew Tilton, chief Asia Pacific economist in Hong Kong, told Bloomberg Television. “Clearly this raises the specter of a significant hit to growth should these tariffs escalate and should the uncertainty associated with that weigh on investment going forward.”

The Trump tweets on Sunday came just two days after an April U.S. employment report that was the embodiment of Goldilocks. Payroll growth surged, while wage gains were slightly cooler than projected, suggesting the healthy American labor market could keep supporting the expansion without sparking inflation.

If the tariffs hike goes ahead, then China’s stabilizing economy means policy makers in Beijing will likely be in a better place to respond, Liu Li-gang, chief China economist at Citigroup Inc. wrote in a note.

'Given the scope for fiscal and monetary stimulus is large in the near term, we believe the negative impact from additional tariffs will likely be managed better this time,' he wrote.

If the U.S. does impose 25 percent tariffs on all Chinese exports, it will be difficult for China to keep growth above 6 percent even with stimulus and the yuan may weaken to 7.2 against the dollar, according to Wang Tao, chief China economist at UBS Group AG in Hong Kong.

'For now, one thing is almost certain: financial markets will react sharply to the suddenly increased risk of a full-on U.S.-China trade war,' Wang wrote in a note.

Investors barely had a chance to enjoy the porridge before the bears were knocking on the door again. The yuan plunged the most in three years and equity markets were roiled.