China vows to fight Trump tariffs ‘to the end’
China’s commerce ministry has vowed to fight US tariffs “to the end” after Donald Trump threatened fresh levies of 50% on imports from the world’s second-largest economy.
“The US threat to escalate tariffs against China is a mistake on top of a mistake, which once again exposes the US’s blackmailing nature,” a ministry spokesperson said on Tuesday.
“China will never accept this,” AFP quoted them as saying.
If the US insists on going its own way, China will fight it to the end.
If the US escalates its tariff measures, China will resolutely take countermeasures to safeguard its own rights and interests.
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.
As the trade war escalates, Beijing – Washington’s major economic rival – unveiled its own 34% duties on US goods to come into effect on Thursday.
China’s commerce ministry on Tuesday also reiterated that it sought “dialogue” with the US, and that there were “no winners in a trade war”.
Key events
Berenberg: UK is well placed to weather the tariff shock
The UK is “well placed to weather the tariff shock” rippling out from the US, argues Berenberg bank in a research note this morning.
Berenberg say they expect many of Donald Trump’s new tariffs to be negotiated away in the next three months, containing the global damage. However, the worst-case scenario of a global recession cannot be ruled out, they say.
In that situation, though, the UK – “No longer the leader in economic self-harm”, they say – could do quite well.
They argue:
The UK has not been short of policies that damage the economy over the past decade. But the US administration’s assault on foreign trade will overshadow the UK’s missteps.
If Donald Trump’s trade war and the equity market sell-off trigger a global recession, the UK would of course struggle. However, the UK is relatively well placed to weather the tariff shock. The additional 10% rate it faces is at the bottom end of the range imposed by the US. Healthy consumer finances, lower energy prices and a fall in interest-rate expectations will also help.
Despite this, UK equity prices have fallen by as much as their European counterparts in the year to date.
The UK’s weakness as an exporter could even turn into a strength in the current environment, Berenberg add:
UK goods exports to the US account for less than 2% of GDP (most of which are re-exports), compared to 3.2% for the Eurozone. The share of UK value added embodied in US demand is well below 1% of GDP. UK government calculations imply that the 10% tariff will directly reduce GDP by less than 0.1%.
In our view, the UK could even stand to make a gain. Some UK producers may gain US market share from worse-hit competitors, and international companies could relocate operations to the UK to avoid higher charges. Admittedly, the spillover from slower growth in economies worse affected by US tariffs will ensure that, in absolute terms, UK growth is weaker than it otherwise would have been.
Wall Street is set to open higher too, despite the latest threats being exchanged between Beijing and Washington DC.
After several days of heavy selling, European stock markets are on track to open higher in an hour’s time.
The futures market is indicating that stocks will rally today in London, with the FTSE 100 share index being called up 167 points, or 2.2%. That would recover about half of yesterday’s losses, and lift the ‘Footsie’ back up from Monday’s one-year low.
Germany’s DAX is also set for a rally – it’s up 2% in pre-market trading.
Summary
If you’re just catching up with today’s continued market ructions over Donald Trump’s sweeping tariffs, here’s a recap of where we stand.
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China’s government says it will “fight to the end” if the US continues to escalate the trade war, after the US president threatened 50% additional tariffs in response to Beijing’s retaliatory measures, ramping up the chances of a disastrous stand-off between the two economic superpowers. China’s commerce ministry accused Washington of “blackmail” and said Trump’s threats of steeper tariffs if Beijing did not reverse its own 34% reciprocal tariff were a “mistake on top of a mistake” and that China would “resolutely take countermeasures”.
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Asian markets appeared to improve slightly in early trading on Tuesday, a day after a torrid Monday on global markets that prompted the billionaire investor Bill Ackman, one of the US president’s backers in the 2024 race for the White House, to call for a moratorium.
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Tokyo traded up more than 6%, recovering much of Monday’s drop, after Japanese prime minister Shigeru Ishiba held talks with Trump. Nippon Steel added about 11% after Trump launched a review of its proposed takeover of US Steel that was blocked by Joe Biden, his predecessor.
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Hong Kong gained more than 2% but was well off recouping Monday’s loss of more than 13% that was the biggest one-day retreat since 1997.
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Shanghai was also up on Tuesday after China’s central bank promised to back major state-backed fund Central Huijin Investment in a bid to maintain “the smooth operation of the capital market”. Sydney, Seoul, Wellington and Manila also rose.
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The advance followed a less painful day on Wall Street, where the S&P and Dow fell but pared earlier losses, while the Nasdaq edged up. Oil prices also enjoyed some respite, gaining more than 1%.
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Others did not fare as well, amid analyst warnings that things could get worse. Taipei shed more than 4% to extend the previous day’s record loss of 9.7%, while Singapore also suffered further selling. Trading in Jakarta was suspended soon after the open as it plunged more than 9% as investors returned from an extended holiday, while the bourse in Vietnam – which has been hit with 46% tariffs – shed 5%.
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The European Commission has proposed counter-tariffs of 25% on a range of US goods, while saying it stands ready to negotiate a “zero for zero” deal with Trump. The 27-member EU – already hit with tariffs on vehicles and metals – faces another 20% on other items from Wednesday. EU trade commissioner Maros Sefcovic told a news conference: “Sooner or later, we will sit at the negotiation table with the US and find a mutually acceptable compromise.”
– With Helen Davidson and agencies
Taiwan’s foreign minister, Lin Chia-lung, has said it can have negotiations with the US at any time over tariffs, as the island’s stock market steadied after plunging on Monday.
Taiwan – a major semiconductor producer – was singled out by Donald Trump as among the US trading partners with one of the highest trade surpluses with the country and was hit with a 32% duty.
Taiwan’s president, Lai Ching-te, on Sunday proposed a zero-tariffs regime with the US, and to invest more in the country and remove trade barriers.
Speaking to reporters on the sidelines of parliament on Tuesday, Lin said Taiwan was ready to talk about a variety of issues with the US, including investment in and purchases from the country and non-tariff barriers, Reuters reports. He said:
As long as there is a confirmed time and method for negotiations, they can be discussed at any time with the United States.
The premier, Cho Jung-tai, also speaking at parliament, confirmed Taiwan was among the US trading partners seeking talks and said the government would choose an appropriate time to present Lai’s plans to the US.
Taiwan’s benchmark stock index, which logged its worst fall ever on Monday, down almost 10%, fell another 4% on Tuesday morning to its lowest level in 14 months. Shares in TSMC , the world’s largest contract chipmaker, dropped around 4%.
Shares in Foxconn, Apple’s biggest iPhone maker, dropped almost 10%, their daily down limit, extending their previous day’s fall.
Recapping Asian market movements so far today, stocks appeared to find a firmer footing after the gut-wrenching few days for investors that prompted some business leaders – including those close to Donald Trump – to urge the US president to reverse course.
Agence France-Presse reports that Japan’s Nikkei index rose 6% on Tuesday, rebounding from a one-and-a-half-year low hit in the previous session, after Trump and Japanese prime minister Shigeru Ishiba agreed to open trade talks in a phone call late Monday.
Chinese blue-chips climbed 0.7%, recouping a fraction of the more than 7% slide on Monday. Hong Kong’s Hang Seng index jumped 2% after suffering the worst day since 1997 as a result of what the trading hub’s leader called “ruthless” tariffs.
US stock futures also pointed higher after slumping to the lowest level in more than a year.
Indonesian markets were slammed, however, with stocks shedding 9% and the rupiah currency ploughing a record low as trading resumed on Tuesday after an extended holiday.
Trump said the tariffs would help the US recapture an industrial base he says has withered over decades of trade liberalisation, telling 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.
In New Zealand, Christian Hawkesby has been appointed as governor of its central bank for a six-month period, finance minister Nicola Willis said on Tuesday.
Hawkesby had been serving as its acting governor since the surprise resignation of Adrian Orr last month.
Willis said Hawkesby was an experienced central banker who had held a number of senior positions at the Reserve Bank of New Zealand and would help ensure its “continued integrity and operations” while a search for a permanent governor was under way, Reuters reports.
During his term, the board would support Hawkesby to implement the bank’s new five-year funding agreement applying from 1 July, Willis said.
Gold prices rebound amid demand for save havens
Gold prices bounced back on Tuesday from a near four-week low reached in the previous session as concerns over a global trade war increased investor appetite for safe-haven assets.
Spot gold was up 0.5% at $2,996.6 an ounce, as of 0340 GMT. Bullion hit its lowest level since March 13 on Monday, Reuters reports. US gold futures gained 1.3% to $3,010.70.
“Escalation of the trade war could trigger a global recession, and that is driving safe-haven demand,” said a senior analyst at Reliance Securities, Jigar Trivedi.
“Despite slipping in the previous sessions, gold is still strong and should remain on the upward trend” because of the bullish undertone.
Gold, often considered a safe investment during times of political and financial uncertainty, scaled an all-time peak of $3,167.57 on 3 April.
Markets will be closely monitoring minutes from the US Federal Reserve’s latest policy meeting, scheduled for release on Wednesday.
Traders also await US consumer price index data, due on Thursday, and the producer price index on Friday for US interest rate cues amid the escalating global trade war and recession fears.
Thai stocks tumble on open
Shares in Thailand have fallen more than 4% at open after Monday’s holiday break, AFP is reporting.
Canada’s prime minister has said the likelihood of a US recession has risen significantly because of Donald Trump’s tariffs and that will have a major negative effect on the Canadian economy.
Mark Carney also told a televised news conference he had spoken with Bank of Canada governor Tiff Macklem and finance minister Francois-Philippe Champagne on Monday about the market turmoil, expressing confidence in both of them.
Meanwhile, Canada has requested World Trade Organisation dispute consultations with the US over Trump’s decision to impose a 25% duty on cars and car parts from Canada, the trade body said.
Canada claims the measures are inconsistent with US obligations under various provisions under the general agreement on tariffs and trade, Reuters quotes the WTO as saying.
Stocks in Vietnam have now dropped by 5% shortly after opening – they are playing catch-up because Monday was a national holiday.
The manufacturing hub has been seeking a last-minute delay to US tariffs of 46% announced last week. Vietnam counted the US as its biggest export market in the first three months of the year, and is the biggest provider of shoes to Nike and Adidas.
Leader To Lam has asked Trump for a delay of at least 45 days to the new levies, according to a copy of a formal letter seen by AFP.
Spanish prime minister Pedro Sanchez aims to open new market opportunities during a visit to China and Vietnam this week on the heels of Donald Trump’s sweeping tariffs.
The trip comes as the European Union rethinks its global trading relationships amid turmoil caused by the US import duties announced last week that have sent world markets into a tailspin, Agence France-Presse reports.
Sanchez is to arrive in Hanoi on Wednesday for talks with Vietnam’s top leader, To Lam, on the same day Trump’s 20% tariffs on EU products come into effect.
On Thursday, he will travel to Ho Chi Minh City, the Asian manufacturing powerhouse’s commercial capital, to meet business leaders.
Sanchez then heads to China for his third visit in just over two years, where he is scheduled to meet President Xi Jinping and Chinese investors on Friday.
India’s Nifty 50 set to open higher after plunge
India’s benchmark Nifty 50 is expected to open higher today, rebounding after it logged its steepest single-day drop in 10 months.
The GIFT Nifty futures were trading at 22,683 as of 8.03am IST, indicating that Nifty would open 2.3% higher than its Monday close of 22,161.6, Reuters reports
The Nifty and the 30-stock BSE Sensex fell 3.2% and 3%, respectively, on Monday, compared to the MSCI Asia ex-Japan index’s 8.4% fall, as a US tariff-fuelled sell-off triggered anxiety among investors.
The total market value of all NSE-listed companies has fallen by $280bn in three sessions since the US tariff announcement last Wednesday.
Most Wall Street equities closed lower overnight. And while Indian equities could likely rebound, “the current investor sentiment is characterised by uncertainty and fear, and it will persist till the time a new normal for global trade is established”, said Shiv Chanani, fund manager of equity at Baroda BNP Paribas Mutual Fund.
The Nifty volatility index – or the fear index – jumped 66% to 22.79, the biggest daily rise in 10 years.
Dhupesh Dhameja, a derivatives research analyst at Samco Securities, said:
The dramatic rise in the volatility index highlights a surge in market anxiety and signals uncertainty among investors ahead of the Reserve Bank of India’s monetary policy meeting.
Vietnam and Indonesia stocks fall
Vietnam’s stocks are down more than 3.5% after the trading holiday, AFP is reporting, while Indonesian shares have plummeted over 9% at open.
Robert Tait
A libertarian group backed by US billionaires Leonard Leo and Charles Koch has mounted a legal challenge against Donald Trump’s tariff regime, in a sign of spreading rightwing opposition to a policy that has sent international markets plummeting.
The New Civil Liberties Alliance filed a suit against Trump’s imposition of import tariffs on exports from China, arguing that doing so under the International Emergency Economic Powers Act – which the president has invoked to justify the duties on nearly all countries – is unlawful.
The group’s actions echo support given by four Republican senators last week for a Democratic amendment calling for the reversal of 25% tariffs imposed on Canada.
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China vows to fight Trump tariffs ‘to the end’
China’s commerce ministry has vowed to fight US tariffs “to the end” after Donald Trump threatened fresh levies of 50% on imports from the world’s second-largest economy.
“The US threat to escalate tariffs against China is a mistake on top of a mistake, which once again exposes the US’s blackmailing nature,” a ministry spokesperson said on Tuesday.
“China will never accept this,” AFP quoted them as saying.
If the US insists on going its own way, China will fight it to the end.
If the US escalates its tariff measures, China will resolutely take countermeasures to safeguard its own rights and interests.
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.
As the trade war escalates, Beijing – Washington’s major economic rival – unveiled its own 34% duties on US goods to come into effect on Thursday.
China’s commerce ministry on Tuesday also reiterated that it sought “dialogue” with the US, and that there were “no winners in a trade war”.
Hong Kong shares rise as Shanghai dips
Hong Kong stocks opened 1.66% higher after Monday’s collapse, while Shanghai stocks extended their losses at open amid the increasing US-China trade war.
Taiwan stocks fell 3% in early trade, AFP reports.
