Donald Trump last night threatened to slap China with tariffs of more than 100 per cent despite mounting pressure from allies to halt his trade war as trillions more were wiped off markets.
Stocks plunged for a third day, yet the US President took aim at Beijing, which said it would impose its own 34 per cent levy on imports of American goods as a retaliatory measure to last week’s tolls.
The tit-for-tat could take the US tariff rate on China to 104 per cent. That would be made up of the 34 per cent tariffs announced last week, which are set to kick in tomorrow and which came on top of 20 per cent levies already in place.
Mr Trump’s threat of an additional 50 per cent would essentially double the price of any Chinese goods imported to the US.
But it was likely to bring a sharp reaction from tech firms such as Apple who have been cosying up to the White House but rely on China for their products. Mr Trump stepped up his action despite calls from billionaire investor Bill Ackman – a major backer of the President – and JP Morgan boss Jamie Dimon to resolve the crisis amid a market meltdown.
Mr Ackman warned the US was heading towards an ‘economic nuclear winter’ as the US tariffs increased the chances of a global recession, while Mr Dimon – often dubbed ‘the world’s most powerful banker’ – warned there may soon be no way back. The developments came as:
- London’s FTSE 100 index of blue-chip stocks fell 4.38 per cent, continuing days of sell-offs and losses; Volatile Wall Street stocks staged a $4trillion rally, on reports that Mr Trump was mulling a 90-day reprieve on tariffs, before falling back when the White House dismissed the speculation as ‘fake news’;
- The US was in ‘bear market’ territory – a term investors use when stocks have fallen 20 per cent from a recent high;
- The Cboe Volatility Index – dubbed Wall Street’s ‘fear gauge’ – hit an eight-month high of 60.13;
- European stock markets recorded a third day of losses with Germany’s Dax falling 4.26 per cent and France’s CAC 40 down 4.78 per cent;
- Asian markets plunged overnight on Sunday with Japan’s Nikkei 225 losing 7.83 per cent and Hong Kong’s Hang Seng tumbliing 13.22 per cent, its biggest single-day fall since 1997;
- Oil prices hit a four-year low of $64.25 per barrel on fears a global recession would dampen demand;
- Gold, usually a safe haven in uncertain economic times, fell about 2 per cent to $2,985 an ounce as investors retreated into cash.
Mr Trump’s threat of an additional 50 per cent would essentially double the price of any Chinese goods imported to the US
Donald Trump last night threatened to slap China with tariffs of more than 100 per cent despite mounting pressure from allies to halt his trade war as trillions more were wiped off markets
Despite the bloodbath in global financial markets and damning criticism from both economists and allies, Mr Trump remained defiant. ‘Be strong, courageous, and patient, and greatness will be the result,” he wrote on Truth Social, his social media platform.
He later threatened Beijing, saying: ‘If China does not withdraw its 34 per cent increase above their already long-term trading abuses by April 8, the United States will impose additional tariffs on China of 50 per cent, effective April 9.
‘Additionally, all talks with China concerning their requested meetings with us will be terminated.’ Mr Trump described tariffs as ‘a beautiful thing to behold’ and added: ‘I don’t want anything to go down but sometimes you have to take medicine to fix something’.
In the Oval Office alongside Israeli prime minister Benjamin Netanyahu last night, Mr Trump again rejected a pause on tariffs.
‘We’re not looking at that,’ he said and added the US ‘has been ripped off by many countries over the years’. Analysts at independent advisers Pantheon Macro said the President’s comments on China had ‘poured gas on the fire’ and upped the risk of a recession.
Mr Ackman, boss of US hedge fund Pershing Square and a Democrat who flipped to support Mr Trump, said: ‘The President is losing the confidence of business leaders around the globe – this is not what we voted for.
‘The President has an opportunity to call a time-out and have the time to execute on fixing an unfair tariff system. Alternatively, we are heading for a self-induced, economic nuclear winter, and we should start hunkering down.’
Tesla boss Elon Musk, the world’s richest man and head of the US department of government efficiency, has also stated all is not aligned in the Trump administration’s economic policy.
Following his call on Sunday for a ‘free-trade zone between Europe and North America’, Mr Musk yesterday shared a video on his X platform of former Ronald Reagan and Margaret Thatcher adviser Milton Friedman extolling the benefits of free markets and complex supply chains.
Mr Musk’s SpaceX is one of those firms said to be pushing for exemptions on tariffs from China.
Mr Dimon told his shareholders: ‘The quicker this issue is resolved, the better because some of the negative effects increase cumulatively over time and would be hard to reverse.’
JPMorgan’s economists raised the risk of a US and global recession this year to 60 per cent from 40 per cent after Mr Trump last week unveiled the steepest trade barriers in more than 100 years.
