Countermeasure: China has announced additional tariffs of 34% on US goods in retaliation to Trump’s levies. — Reuters
BEIJING announced additional tariffs of 34% on US goods, striking back at US President Donald Trump and escalating a trade war that has fed fears of a recession and triggered a global stock market rout that showed no sign of slowing.
In the standoff between the world’s two biggest economies, Beijing also announced controls on exports of some rare earths, while Trump doubled down as well, vowing not to change course.
China added 11 US bodies to the “unreliable entity” list, which allows Beijing to take punitive actions against foreign entities, including firms linked to arms sales to democratically governed Taiwan, which China claims as part of its territory.
Other impacted nations such as Canada have also readied retaliation measures in a mounting trade war after Trump raised US tariff barriers to the highest levels in more than a century, leading to a plunge in world financial markets.
Investment bank JP Morgan estimated a 60% chance of the global economy entering recession by year-end, up from 40% previously.
Wall Street was down sharply early Friday afternoon in the wake of China’s response, a day after the Trump administration’s sweeping levies knocked off US$2.4 trillion (RM10.6 trillion)from US equities.
Shares of big tech stocks fell, helping to drive the Nasdaq towards a bear market.
Companies with big exposure to China and Taiwan for manufacturing their products were hard-hit, with Apple down 4.7% and Nvidia falling 7.6%.
The Nasdaq dropped 4.6%, bringing the index down over 20% from its all-time closing high in December.
“This is significant and is unlikely to be over, hence the negative market reactions,” said Stephane Ekolo, Market & Equity Strategist, Tradition, London.
“Investors are afraid of a ‘tit for tat’ trade war situation.”
Federal Reserve Chair Jerome Powell told a business journalists conference on Friday the tariffs were “larger than expected” and elevated the risk of both higher inflation and slower growth.
The Fed can wait for more data to decide how monetary policy should respond, but it will focus on keeping inflation expectations anchored if Trump’s tariffs sparked more persistent price pressures, Powell said.
He did not directly address the US stocks selloff but acknowledged that uncertainty had paused business decisions.
“People are just, they just are kind of waiting for clarity,” Powell said. “I can’t tell you when that will pass, but you know, ultimately it will pass.”
Just before Powell spoke, Trump said in a Truth Social post that it was the “perfect time” for the Fed to cut interest rates.
“CUT INTEREST RATES, JEROME, AND STOP PLAYING POLITICS!” Trump wrote. — Reuters
