China vowed on Tuesday to “fight to the end” against fresh tariffs of 50 percent threatened by US President Donald Trump, further aggravating a trade war that has already wiped trillions off global markets.
Trump upended the world economy last week with sweeping tariffs that have raised the spectre of an international recession, but has ruled out any pause in his aggressive trade policy despite a dramatic market sell-off.
Beijing — Washington’s major economic rival — responded by announcing its own 34 percent duties on US goods to come into effect on Thursday, in a showdown between the world’s two biggest economies.
The swift retaliation from China earned a new warning from Trump that he would impose additional levies if Beijing refused to stop pushing back against his barrage of tariffs — driving the overall levies on Chinese goods to 104 percent.
“I have great respect for China but they can not do this,” Trump said in the White House. “We are going to have one shot at this… I’ll tell you what, it is an honour to do it.”
China swiftly hit back, blasting what it called “blackmailing” by the US and saying it would “never accept” such action.
“If the US insists on going its own way, China will fight it to the end,” a spokesperson for Beijing’s commerce ministry said on Tuesday, adding that Trump’s threat “once again exposes the US’s blackmailing nature”.
“If the US escalates its tariff measures, China will resolutely take countermeasures to safeguard its own rights and interests,” the ministry said.
The ministry reiterated that it sought “dialogue” with the United States, and that there were “no winners in a trade war”.
Trump’s tariffs have already had a dramatic impact on markets in the last days, with Hong Kong’s Hang Seng collapsing by 13.2 percent on Monday — its worst day since the Asian financial crisis — before paring back some of those losses in opening trade on Tuesday.
Wall Street stocks finished lower following a volatile session, with both the Dow and S&P 500 ending down.
Trillions of dollars have been wiped off combined stock market valuations in recent sessions.
Trump doubled down again on Monday, saying he was “not looking” at any pause in tariff implementation.
He also scrapped any meetings with China over tariffs, but said the United States was ready for talks with any country willing to negotiate.
After equities took a huge hammering in Shanghai on Monday, China’s central bank issued a statement before trading resumed Tuesday to underline it was standing behind a sovereign fund as it buys up exchange traded funds to stabilise the market.
With investors seeking any relief from the ruinous trade war, stocks in Tokyo leapt on Tuesday after Treasury Secretary Scott Bessent suggested in an interview with Fox News that Japan would get “priority” in negotiations over the US tariffs “just because they came forward very quickly”.
A 10 percent “baseline” tariff on US imports from around the world took effect Saturday, and a slew of countries will be hit by higher duties from Wednesday, including the levy of 34 percent for Chinese goods as well as 20 percent for EU products.
Scores of countries have sought talks, Bessent told Fox News, adding “through good negotiations, all we will do is see levels come down”.
While meeting Israel‘s Prime Minister Benjamin Netanyahu, the first leader to lobby Trump in person over the levies, the US President said: “There can be permanent tariffs, and there can also be negotiations, because there are things that we need beyond tariffs.”
EU trade ministers were in Luxembourg on Monday to discuss the bloc’s response, with Germany and France having advocated a tax targeting US tech giants.
“We must not exclude any option on goods, on services,” said French Trade Minister Laurent Saint-Martin.
The 27-nation bloc should “open the European toolbox, which is very comprehensive and can also be extremely aggressive”, he said.
While markets continued its wild ride, Trump told Americans: “Don’t be Weak! Don’t be Stupid!”.
The 78-year-old Republican believes that the tariffs will revive America’s lost manufacturing base by forcing foreign companies to relocate to the United States, rather than making goods abroad.
But most economists question his theory and say his tariffs are arbitrary.
JPMorgan Chase CEO Jamie Dimon warned of coming inflation, adding “whether or not the menu of tariffs causes a recession remains in question, but it will slow down growth”.
US Senator Ted Cruz — a staunch Trump loyalist — expressed widespread concern among Republican lawmakers over the impact on ordinary voters.
He warned of a jobs crunch and rising prices, saying a recession would mean a “bloodbath” for Republicans in mid-term elections next year.
