U.S. President Donald Trump on Monday threatened new tariffs of 50 per cent on China, ratcheting up a trade war even as a dramatic selloff in global markets gathered pace.
Trump upended the world economy last week with sweeping tariffs that have raised fears of an international recession and triggered criticism even from within his own Republican Party.
In response to Trump’s tariffs, Beijing — Washington’s major economic rival — unveiled its own 34 per cent duties on U.S. goods to come into effect on Thursday.
The U.S. president on Monday chastised China for not heeding “my warning for abusing countries not to retaliate.”
He said on social media that if China did not immediately back down “the United States will impose ADDITIONAL Tariffs on China of 50%, effective April 9th.”
With the incoming 34 per cent rate and new 50 per cent threat, the total additional tariffs this year could hit 104 per cent, the White House said.
Stock markets and oil prices collapsed further, as trading floors across the world were overcome by waves of selling after last week’s sharp losses.
Wall Street was wracked by volatility, bouncing into positive territory on hopes of a 90-day pause in tariffs, only to sink lower when those were dashed by the White House.
Hong Kong collapsed by 13.2 per cent Monday, its worst day in nearly three decades.
Trillions of dollars have been wiped off combined stock market valuations in recent sessions.
Tokyo closed down by almost eight per cent. Frankfurt fell as much as 10 per cent in early trading before paring back losses.
‘Don’t be weak’
“Don’t be Weak! Don’t be Stupid!” Trump urged Americans minutes before Wall Street opened.
“Be Strong, Courageous, and Patient, and GREATNESS will be the result!”
Trump scrapped any meetings with China over its retaliation, but said the United States was ready to open talks with all countries willing to negotiate.
A 10 per cent “baseline” tariff on U.S. imports from around the world took effect Saturday but a slew of countries will be hit by higher duties from Wednesday, with levies of 34 per cent for Chinese goods and 20 per cent for EU products.
Chinese vice commerce minister Ling Ji said its tit-for-tat duties “are aimed at bringing the United States back onto the right track of the multilateral trade system.”
“The root cause of the tariff issue lies in the United States,” Ling said to representatives of U.S. companies on Sunday.
EU trade ministers gathered in Luxembourg on Monday to discuss the bloc’s response, with Germany and France having advocated a tax targeting U.S. 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.
But signs of divergence emerged from Ireland, whose low corporate tax rate has attracted U.S. tech and pharmaceutical companies.
Targeting services “would be an extraordinary escalation,” said Irish Trade Minister Simon Harris.
Inflation? Recession?
Bitcoin tumbled, while the dollar rebounded after sharp losses last week.
The 78-year-old Republican believes that the tariffs will revive America’s lost manufacturing base by forcing foreign companies to relocate to U.S. soil, rather than making goods abroad.
But most economists question his theory and say his tariff figures on importing countries are arbitrary.
JPMorgan Chase CEO Jamie Dimon warned the tariffs “will likely increase inflation,” in a letter to shareholders.
“Whether or not the menu of tariffs causes a recession remains in question, but it will slow down growth,” he said.
“The market’s telling you in plain language: global demand is vanishing, and a global recession is on the cards and coming on fast,” said Stephen Innes at SPI Asset Management.
U.S. Senator Ted Cruz — a staunch Trump loyalist — warned of a jobs crunch and rising inflation that would threaten the Republican hold on Congress.
Benjamin Netanyahu, prime minister of Israel — hit with 17 per cent tariffs, despite being one of Washington’s closest allies — was due on Monday to become the first leader to meet Trump since last week’s announcement.
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