Beijing (AFP) – Stock markets regained some ground on Tuesday, even as trade tensions between the United States and China escalated sharply after days of turmoil over US President Donald Trump’s tariffs offensive. Trump has upended the world economy with sweeping tariffs that have raised the spectre of an international recession, but has ruled out any pause in his aggressive trade policy despite a dramatic market sell-off.
Steep tariffs come into effect against goods from a raft of nations on Wednesday, with Chinese products facing a 34-percent levy that Beijing will counter with a similar duty on Thursday. Trump has warned he would impose additional levies of 50 percent if Beijing refused to stop pushing back against his tariffs. “I have great respect for China but they cannot do this,” Trump said at the White House.
China swiftly hit back, blasting what it called “blackmailing” by the United States and vowing “countermeasures” if Washington imposes more tariffs. “If the US insists on going its own way, China will fight it to the end,” a spokesperson for Beijing’s commerce ministry said on Tuesday.
In a mounting war of words, China’s foreign ministry also condemned “ignorant and impolite” remarks by US Vice President JD Vance in which he complained the United States had for too long borrowed money from “Chinese peasants.” The ministry said that “pressure, threats and blackmail are not the right way to deal with China.”
The European Union sought to cool tensions, with the bloc’s chief Ursula von der Leyen warning against worsening the trade conflict in a call with Chinese Premier Li Qiang. She stressed the “vital importance of stability” for the world’s economy as well as “the need to avoid further escalation,” according to a readout from EU officials.
The Chinese premier told von der Leyen that the world’s number two economy has the “tools” necessary to weather economic headwinds. “China can fully hedge against adverse external effects, and is fully confident of maintaining sustained and healthy economic development,” he said, according to state news agency Xinhua.
The EU said Tuesday that it expects to present as soon as next week its response to the 20-percent levies it is facing under Trump’s latest tariff wave, with Germany and France advocating a tax targeting US tech giants. But Brussels has also proposed an exemption from tariffs on industrial products, including cars, which Trump said was not enough to resolve the US trade deficit with the EU. “The European Union has been very, very bad to us,” Trump said.
In retaliation for US levies introduced in mid-March on steel and aluminum, the EU plans tariffs of up to 25 percent on US goods ranging from soybeans to motorcycles and makeup, according to a document seen by AFP. But US bourbon was spared after Trump threatened to hit European wine and spirits with massive retaliatory duties. A 10 percent “baseline” tariff on US imports from around the world took effect Saturday.
Trump’s tariffs have roiled global markets, with trillions of dollars wiped off combined stock market valuations in recent sessions. But Wall Street stocks surged at the open Tuesday, with all three major US indices up more than three percent as Trump reported a “great call” with South Korea’s leader while US Treasury Secretary Scott Bessent said Japan had sought quick negotiations.
Europe’s main stock markets were up around three percent in afternoon trade while Asia’s leading indices also rose after suffering particularly heavy falls on Monday. Trump believes the tariffs will revive America’s lost manufacturing base by forcing foreign companies to relocate to the United States, rather than making goods abroad. But most economists question that and say his tariffs are arbitrary.
Despite the turmoil, Trump said Monday he was “not looking” at any pause in tariff implementation. He also scrapped any meetings with China but said Washington was ready for talks with any country willing to negotiate. More than 50 nations have sought to reach out to the US leader, according to the White House. While meeting Israel’s Prime Minister Benjamin Netanyahu, the first leader to lobby Trump in person over the levies, Trump said: “There can be permanent tariffs, and there can also be negotiations, because there are things that we need beyond tariffs.”
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