On Wednesday, President Donald Trump's 'retaliatory' tariffs on dozens of countries, including 104% tariffs on Chinese goods, came into effect, escalating his global trade war even as he prepared for negotiations with some countries, writes Reuters.
On Wednesday, sell-offs resumed in most Asian markets: Japan's Nikkei index fell by 3%, the South Korean currency hit a 16-year low, and government bonds took heavy losses as investors rushed to cash.
European stocks also fell: the STOXX 600 index decreased by 2.5%, Germany's trade-sensitive core index fell by 2.1%. German Finance Minister Jörg Kukies stated that Europe's largest economy is at risk of a new recession due to trade tensions. Energy company stocks fell by 3.8% as oil prices dropped to their lowest level in four years, and mining company stocks fell by 4% as China, the world's main metal exporter, was taxed at 104%.
Investors also dumped U.S. government bonds, which are often considered safe assets, rushing to safe havens.
German company Redcare Pharmacy fell by 15.6% after issuing convertible bonds.
European and American stock futures indicate that more turmoil is ahead. However, Chinese stocks held steady as state support helped the market.
Trump nearly doubled tariffs on Chinese imports, which were set at 54% last week, in response to counter-tariffs announced by Beijing last week. China vowed to fight what it considers blackmail.
Leading Chinese brokerage firms pledged to work together to help stabilize stock prices in the domestic market in response to the tariff-induced turmoil. As The New York Times writes, the imposed tariffs had an unexpected effect — China became an even more attractive place for production and procurement. This eliminated some incentives for production diversification or supplier diversification to countries like Vietnam and India.
Top Chinese leaders plan to hold a meeting to discuss measures to stimulate the economy and stabilize capital markets, sources told Reuters. It is expected that policymakers will discuss measures to stimulate domestic consumption and support capital markets, and initiatives such as export tax rebates are likely to be discussed.
Meanwhile, markets, after a brief stabilization, went down again. The S&P 500 index lost nearly $6 trillion since Trump imposed tariffs a week ago, marking the deepest four-day drop since its creation in the 1950s.
However, Donald Trump is not going to stop, boasting of putting pressure on other leaders, demanding negotiations. 'We have many countries that want to make deals,' he said at an event at the White House on Tuesday afternoon. At a fundraising meeting for the National Republican Committee, Trump was even more specific and candid, outlining priorities in communication with global partners.
'These countries are calling us. Kissing my ass. They are dying to make a deal: 'Please, please, sir, make a deal. I'll do anything, sir,' the U.S. president said. Trump also stated that he receives more approval than any U.S. president in the first 100 days of his term. 'No one even came close. Someone told me that the most successful month, the first month in history — is now. They say these are the most successful 100 days in the history of our country. And I believe it is true, and we will continue in the same spirit,' the U.S. president concluded. Meanwhile, according to Forbes, Trump's own fortune decreased by $500 million due to the impact of the tariffs he imposed.
Some economists warn that ultimately American consumers are likely to bear the brunt of the trade war, facing rising prices on everything from sneakers to wine. Nearly three-quarters of Americans expect prices of everyday goods to rise in the next six months, a new Reuters/Ipsos poll showed.
At the same time, Trump made it clear that he may not be finished with tariffs. Speaking on Tuesday evening to Republican lawmakers, he announced 'major' tariffs on pharmaceutical imports — one of the few categories of goods that were exempt from new taxes. 'We are going to announce big tariffs on pharmaceuticals very soon. Once we do that and companies hear it, they will leave China, they will leave other places because they will have to — most of their products are sold here, and they will open their factories all over our country. The advantage we have over everyone is that we are a big market,' Trump said.
Many countries prefer to negotiate with the 'big market.' The Trump administration has planned talks with South Korea and Japan, two close allies and major trading partners, and Italian Prime Minister Giorgia Meloni is set to visit the country next week. Vietnam's Deputy Prime Minister, an Asian manufacturing hub with low prices, which has some of the highest tariffs in the world, is scheduled to have a conversation with Finance Minister Scott Bessent on Wednesday.
Canada seems to have already passed the 'deal' stage and announced the introduction of counter-tariffs in response to Trump's tariffs. This involves 25% tariffs on certain vehicles from the U.S. 'President Trump caused this trade crisis — and Canada is responding deliberately and forcefully... My government will fight U.S. tariffs, protect Canadian workers, and build the strongest economy in the G7,' said the country's Prime Minister Mark Carney.
Photo: The New York Times