The global trade war, which flared up after US President Donald Trump imposed massive tariffs, continued on Tuesday with a relative stabilization of stock markets and anticipation of further actions.
China responded to Trump's ultimatum to impose additional 50% tariffs on Chinese goods if Beijing does not cancel its 'retaliatory tariffs'. This increase, considering the effect of previous tariffs, to more than 100%, China called 'a mistake on a mistake, which once again exposes the blackmailing nature of the American side', promising to 'fight to the end'.
The European Union proposed its own counter-tariffs in response to Trump's tariff pressure, which affected dozens of countries, crashed financial markets, and heightened expectations that the global economy could fall into recession. The European Commission proposed imposing counter-tariffs of 25% on a range of American goods, including soybeans, nuts, and sausages, although other potential goods, such as bourbon whiskey, were excluded from the list, according to a document seen by Reuters.
Meanwhile, officials said they are ready to negotiate with the Trump administration on a 'zero for zero' deal. 'Sooner or later we will sit down at the negotiating table with the US and find a mutually acceptable compromise', said EU Trade Commissioner Maroš Šefčovič at a press conference.
Stock markets found firmer footing after several days that were a severe test for investors and prompted some business leaders, including those close to Trump, to urge the president to change course.
According to Politico, US Treasury Secretary Scott Bessent met with Trump in Florida on Sunday to urge him to focus on making trade deals with partners to convince markets that the US strategy has a final goal.
Administration officials say that dozens of other countries have approached them in hopes of preventing the imposition of tariffs, which are set to take effect on Wednesday.
Wall Street leaders have issued warnings about US tariffs: JPMorgan Chase CEO James Dimon said they could have long-term negative consequences, and hedge fund manager Bill Ackman said they could lead to an 'economic nuclear winter'. Billionaire Elon Musk, who leads Trump's efforts to cut government spending, over the weekend called for zero tariffs between the US and Europe. He also directly appealed to Trump to cancel the tariffs, reports Washington Post. As Bloomberg writes, Trump's tariffs hit Musk hard—his fortune fell below $300 billion. On Monday, the owner of Tesla lost more than $4 billion.
Meanwhile, markets opened with cautious optimism. After Trump and Japanese Prime Minister Shigeru Ishiba agreed to open trade talks, the Japanese Nikkei index rose by 6% on Tuesday, bouncing back from a 1-1.5 year low reached in the previous session.
Chinese blue chips rose by 1%, recovering part of the more than 7% drop on Monday. The Hong Kong Hang Seng index jumped about 2% after the worst day since 1997. US stock futures also rose after falling to the lowest level in more than a year.
However, Indonesian markets were hit: stocks fell by 9%, and the rupiah reached a record low when trading resumed on Tuesday after extended holidays. The country's central bank promised to intervene, joining efforts by other global authorities aimed at stopping the economic decline in recent days.
Meanwhile, Trump stated that tariffs—at least 10% on all American imports with target rates up to 50%—will help the United States restore the industrial base, which he says has weakened over decades of trade liberalization.
'This is the only chance for our country to reshape the negotiating table. Because no other president would agree to do what I am doing, or even go through this', he told reporters at the White House.
Photo: Reuters