US President Donald Trump threatened to further increase tariffs on China, raising the possibility of further escalation in a trade war that has already wiped trillions of dollars from global markets.
Trump said he would impose an additional 50 percent duty on US imports from China on Wednesday (US time) if the world’s No. 2 economy did not withdraw the 34 percent tariffs it had imposed on US products last week. Those Chinese tariffs had come in response to 34 percent “reciprocal” duties announced by Trump.
“All talks with China concerning their requested meetings with us will be terminated!” he wrote on social media.
The announcement injected further turbulence into global financial markets, which have fallen steadily since Trump’s announcement. A 10 percent tariff took effect on all imports into the world’s largest consumer market on Saturday, and targeted duties of up to 50 percent are due to snap into place on Wednesday.
US stocks briefly stopped their downward slide after a report that Trump was considering a 90-day tariff pause, then turned negative again after the White House dismissed the report as “fake news.” The S&P 500 index was headed toward a 20 percent drop from its February high.
Asian and European shares also plunged as investors feared the duties Trump has likened to “medicine” could lead to higher prices, weaker demand and potentially a global recession. Goldman Sachs raised the odds of a US recession to 45 percent.
The European Union said it would start collecting retaliatory duties on some US goods next week, even as officials said they stood ready to negotiate a “zero for zero” deal with Trump’s administration.
“Sooner or later, we will sit at the negotiation table with the US and find a mutually acceptable compromise,” EU Trade Commissioner Maros Sefcovic said at a news conference.
Trump aides say Trump is following through on a promise to reverse decades of trade liberalisation that he believes has undercut the US economy. But they also said he is willing to negotiate with dozens of countries that have reached out for talks.
“He’s doubling down on something that he knows works, and he’s going to continue to do that,” White House economist Kevin Hassett said Trump on Fox News. “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.”
China’s retaliatory levies are the firmest response yet to Trump’s announcement, which has been met with bewildered condemnation from other leaders. Beijing called Trump’s behaviour “economic bullying”. After stocks in mainland China and Hong Kong cratered on Monday, China’s sovereign fund stepped in to try to stabilise the market. Shares in Taiwan plummeted almost 10 percent – the biggest one-day percentage fall on record.
Wall Street leaders issued warnings on US tariffs, with JPMorgan Chase CEO Jamie Dimon saying they could have lasting negative consequences, while fund manager Bill Ackman, said they could lead to an “economic nuclear winter.” Ackman is one of a handful of Trump supporters who questioned the strategy. Billionaire Elon Musk, who is leading Trump’s effort to slash government spending, called for zero tariffs between the US and Europe over the weekend.
On Monday, Trump trade adviser Peter Navarro dismissed the Tesla CEO as a “car assembler.”
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