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US President Donald Trump threatened to further increase tariffs on China yesterday, raising the possibility of further escalation in a trade war that has already wiped trillions of dollars from global markets.
Trump said he would impose an additional 50 per cent duty on US imports from China tomorrow if the world’s number two economy did not withdraw the 34pc tariffs it had imposed on US products last week. Those Chinese tariffs had come in response to 34pc “reciprocal” duties announced by Trump.
“All talks with China concerning their requested meetings with us will be terminated!” he wrote on social media.
The announcement injected further turbulence into global financial markets, which have fallen steadily since Trump’s announcement. A 10pc tariff took effect on all imports into the world’s largest consumer market on Saturday, and targeted duties of up to 50pc are due to snap into place tomorrow.
US stocks briefly stopped their downward slide after a report that Trump was considering a 90-day tariff pause, then turned negative again after the White House dismissed the report as “fake news.” The S&P 500 index was headed toward a 20pc drop from its February high.
Asian and European shares also plunged as investors feared the duties Trump has likened to “medicine” could lead to higher prices, weaker demand and potentially a global recession. Goldman Sachs raised the odds of a US recession to 45pc.
In his post, Trump also warned other countries contemplating retaliatory tariffs against the US, stating that any nation taking such actions would immediately face new and substantially higher tariffs. He reiterated his previous stance on what he calls the “long-term tariff abuse” by other nations, particularly China, which he claims has been taking advantage of the US for decades.
Trump further defended his administration’s tariff policies, arguing that the US is benefiting from the current trade measures. He pointed to the decline in oil prices, lower interest rates, and reduced food prices as signs of economic progress, despite the escalating trade tensions. “There is NO INFLATION,” Trump declared while emphasising that the US is bringing in billions of dollars every week from the tariffs already in place.
The trade war with China has intensified since Trump imposed tariffs in February and March, citing concerns over China’s role in the fentanyl crisis and unfair trade practices. While Trump has previously signalled his willingness to negotiate, his recent comments and actions suggest a hardline approach to China’s growing trade aggression.
China’s response to the tariffs has been swift and forceful, with Beijing taking a firmer stance than during previous rounds of tariff increases. Experts warn that the ongoing escalation is making it increasingly difficult for both sides to de-escalate without losing face, and a resolution to the trade dispute appears further out of reach.
As the two economic giants continue their battle, global markets remain volatile, and businesses are left grappling with the uncertainties created by the trade conflict. The looming threat of even higher tariffs from both sides signals a protracted period of tension, with no clear path to reconciliation in sight.
With both countries dug in, the prospects for a peaceful resolution seem increasingly uncertain, and the stakes for global trade continue to rise.
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