China has announced new tariffs of 84% on imports of all US goods in a move that sent stock markets falling further and will raise fears of further escalation of Donald Trump’s trade war.
The Chinese ministry of finance said on Wednesday it would impose 84% tariffs on US goods from Thursday, up from the 34% previously announced.
The decision came hours after new rates on imports into the US from dozens of economies rose further, with tariffs imposed on Chinese products since Trump returned to the White House reaching a staggering 104%.
China’s retaliation sent stock markets, which had slumped on Wednesday, falling further with major indices down in the UK, Germany, France and Spain.
In London, the FTSE 100 closed at a fresh 13-month low down 2.92%, or 231.05 points, at 7,679.48. Germany’s Dax index fell by about 3% and France’s Cac 40 was down 3.3%.
The S&P 500, the Wall Street benchmark stock index, dropped by 0.4% in early trading, while the Dow Jones industrial average fell 0.7%. However, US markets later recovered some ground as the US Treasury secretary, Scott Bessent, indicated that America was open to trade agreements with allies and a subsequent group deal with China.
In his first comments since China’s 84% tariff announcement, Trump posted on Truth Social: “This is a great time to move your company into the United States of America, like Apple, and so many others, in record numbers, are doing. Zero tariffs, and almost immediate Electrical/Energy hook ups and approvals. No Environmental Delays. Don’t wait, do it now!
“Be cool! Everything is going to work out well. The USA will be bigger and better than ever before!”
Before the announcement , China’s government said it was unwilling to fight a trade war but “will never sit idly by and watch the legitimate rights and interests of the Chinese people be damaged and deprived”.
The global economy has been rocked since sweeping 10% US tariffs took effect over the weekend, prompting dramatic market sell-offs worldwide and sparking recession fears.
The falls in Europe followed another tumultuous day on some Asian markets. Japan’s Nikkei benchmark index closed down almost 4%, while Taiwan’s benchmark stock index was 5.8% lower. Hong Kong’s Hang Seng index recouped some earlier falls to close 0.4% down, and South Korea’s Kospi 200 index dropped by 1.8%.
However, China’s stock markets rose, appearing to weather the storm after government interventions. The SSE composite index in Shanghai ended the day 1.1% higher, while the Shenzhen SE composite rose 2.2%.
Speaking after a speech in Washington on Wednesday, Bessent said: “We can probably reach a deal with our allies … they’ve been good military allies, not perfect economic allies. And then we can approach China as a group.”
Oil prices fell for a fifth day in a row on Wednesday, to the lowest level in four years, since February 2021, over concerns that a global trade war would dampen demand and dent economic growth. Brent crude oil futures prices dropped to as low as $58.47 (£45.82).
The new US tariffs are tailored to specific countries based on a formula that has been criticised by economists that divides trade in goods deficit by twice the total value of imports.
“President Trump has a spine of steel and he will not break,” the press secretary, Karoline Leavitt, said on Tuesday. “And America will not break under his leadership.”
US stocks dropped on Tuesday for a fourth straight trading day, with the S&P 500 closing below 5,000 for the first time in almost a year.
Beijing has accused the US of abusing trade levers to suppress China, failing to meet obligations under numerous agreements including the phase one trade deal signed during Trump’s first term, and “systematically escalat[ing] economic and other forms of pressure against China”.
Trump believes his policy will revive the country’s lost manufacturing base by forcing companies to relocate to the US. But many business experts and economists question how quickly – if ever – this can take place, warning of higher inflation as the tariffs raise prices.
Bessent said the new tariffs were at “maximum” levels, and expressed confidence that negotiations would bring them down.
“I think you are going to see some very large countries with large trade deficits [with the US] come forward very quickly,” he told CNBC, the financial news network, on Tuesday. “If they come to the table with solid proposals, I think we can end up with some good deals.”
The US administration has scheduled talks with South Korea and Japan, two close allies and major trading partners, and the Italian prime minister, Giorgia Meloni, is due to visit next week.
“These are tailored, highly tailored deals,” Trump said at a White House event. “We’ve had talks with many, many countries, over 70, they all want to come in. Our problem is, can’t see that many that fast.”
Trump’s top trade official, Jamieson Greer, told the US Senate that Argentina, Vietnam and Israel were among those who had offered to reduce their tariffs.
Trump originally announced a 34% additional tariff on Chinese goods. However, after China announced its own 34% counter-tariff on American products, he vowed to pile on another 50% duty. Counting existing levies imposed in February and March, that would take the cumulative tariff increase for Chinese goods during Trump’s second presidency to 104%.
The new US tariffs imposed on 57 target countries, territories and blocs include rates of 20% on the EU, 26% on India and 49% on Cambodia.
The EU has sought to cool tensions, with the European Commission president, Ursula von der Leyen, warning against worsening the trade conflict in a call with the Chinese premier, Li Qiang.
Von der Leyen stressed stability for the world’s economy, alongside “the need to avoid further escalation”, an EU readout said.
The French president, Emmanuel Macron, called on Trump to reconsider, adding that if the EU was forced to respond then “so be it”.
