China refused to yield to what it termed “blackmail” from the United States. A global trade war ignited by President Donald Trump’s extensive tariffs showed few signs of slowing down on Tuesday. Battered stock markets did, however, stabilize.
Beijing’s strong reaction followed Trump’s threat to escalate tariffs on U.S. imports from China. He proposed raising them to over 100% on Wednesday. This was in response to China’s decision to match the “reciprocal” duties that Trump initially announced the previous week.
China’s commerce ministry stated, “The U.S. side’s threat to escalate tariffs against China is a mistake on top of a mistake, once again exposing the American side’s blackmailing nature.”
They further declared, “If the U.S. insists on having its way, China will fight to the end.”
Chinese manufacturers are already feeling the pressure. They produce goods ranging from tableware to flooring. These manufacturers are issuing profit warnings, planning new overseas plants, and negotiating prices with customers.
The European Union proposed its own counter-tariffs in response to Trump’s widespread tariffs. These tariffs affected numerous countries and sent financial markets into turmoil. They also fueled expectations of a potential global recession.
Stock markets recovered somewhat after a difficult few days for investors. This prompted some business leaders, including those close to Trump, to urge the president to reverse his course.
Japan’s Nikkei index rose 6% on Tuesday. This rebound followed a 1-1/2-year low hit in the previous session. This was after Trump and Japanese Prime Minister Shigeru Ishiba agreed to open trade talks.
Chinese blue chips climbed 1%, recovering some of the losses from Monday’s more than 7% drop. Hong Kong’s Hang Seng Index jumped 2% after its worst day since 1997. The trading hub’s leader attributed this to “ruthless” tariffs.
European and U.S. stock futures also indicated a stronger opening after several days of losses. Global oil prices rebounded following a significant sell-off.
Indonesian markets, however, were severely impacted. Stocks plummeted 9%, and the rupiah currency reached a record low as trading resumed on Tuesday after a long holiday. Its central bank pledged to intervene. Other global authorities also made efforts to halt the recent market decline.
Trump stated that the tariffs would help the United States reclaim its industrial base. He believes it has weakened over decades of trade liberalization. The tariffs include a minimum of 10% for all U.S. imports, with targeted rates of up to 50%.
He told reporters at the White House, “It’s the only chance our country will have to reset the table. Because no other president would be willing to do what I’m doing, or to even go through it.”
EUROPE PLANS COUNTERMEASURES
The European Commission proposed counter-tariffs of 25% on various U.S. goods. These included soybeans, nuts, and sausages. Other potential items, such as bourbon whiskey, were excluded from the list.
Officials stated that they were ready to negotiate a “zero for zero” deal with Trump’s administration. EU Trade Commissioner Maros Sefcovic said at a news conference, “Sooner or later, we will sit at the negotiation table with the U.S. and find a mutually acceptable compromise.”
The 27-member bloc is already dealing with tariffs on autos and metals. It now faces a 20% tariff on other products on Wednesday. Trump has also threatened to impose tariffs on EU alcoholic drinks.
Vietnam, a low-cost manufacturing hub facing some of the highest duties, has requested a 45-day delay. It also said it will buy more American goods, including defense and security products, to rebalance trade.
Investors and political leaders are uncertain about the permanence of Trump’s tariffs. They are unsure if they are simply a tactic to gain concessions from other countries.
U.S. Treasury Secretary Scott Bessent met with Trump in Florida on Sunday. Politico reported that he urged Trump to emphasize striking trade deals with partners. This would reassure the markets that there is an endgame to the U.S. strategy.
Administration officials say dozens of other countries have reached out, hoping to avoid the tariffs that are scheduled to take effect on Wednesday.
Trump administration officials maintain that the president is fulfilling a promise. He promised to reverse decades of trade liberalization. He believes this has undermined the U.S. economy.
White House economist Kevin Hassett said on Fox News, “He’s doubling down on something that he knows works, and he’s going to continue to do that.” He added, “But he is also going to listen to our trading partners, and if they come to us with really great deals that advantage American manufacturing and American farmers, I’m sure he’ll listen.”
Wall Street leaders have warned about the U.S. tariffs. JPMorgan Chase CEO Jamie Dimon said they could have lasting negative consequences. Fund manager Bill Ackman said they could lead to an “economic nuclear winter.”
Ackman is one of the Trump supporters who has questioned the strategy. Billionaire Elon Musk, who leads Trump’s effort to cut government spending, called for zero tariffs between the U.S. and Europe over the weekend. He has also appealed directly to Trump to reverse the tariffs. The Washington Post reported this.
On Monday, Trump trade adviser Peter Navarro dismissed the Tesla CEO as a “car assembler.”
Investors are now betting that the growing risk of recession could prompt the U.S. Federal Reserve to cut rates as early as next month. Trump repeated his call for the central bank to lower rates on Monday. However, Fed chief Jerome Powell has indicated he is in no rush.
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