American businesses are cancelling orders from China, postponing expansion plans and hunkering down to see what trade policy surprises President Donald Trump plans to spring on them next.

"You don't know whether or not China's going to eat it," Trump said of the potential for tariffs on Chinese goods to increase consumer prices.

China's factory activity contracted at the fastest pace in 16 months in April, a factory survey showed on Wednesday, keeping alive calls for further stimulus as Donald Trump's "Liberation Day" package of tariffs snapped two months of recovery.