BEIJING: China said on Saturday (Apr 5) “the market has spoken” in rejecting US President Donald Trump’s tariffs, and called on Washington for “equal-footed consultation” after global markets’ dramatic reaction to the trade levies, which drew Chinese retaliation. Several Chinese commerce associations in industries from healthcare and textiles to electronics also issued statements on Saturday calling for unity in exploring alternative markets and warning that the tariffs would worsen inflation in the US. “The market has spoken,” Chinese foreign ministry spokesperson Guo Jiakun said in a post on Facebook on Saturday morning. He also posted a picture capturing Friday’s falls on US markets. Trump introduced additional 34 per cent tariffs on Chinese goods as part of steep levies imposed on most US trade partners, bringing the total duties on China this year to 54 per cent. Trump also closed a trade loophole that had allowed low-value packages from China to enter the US duty-free. This prompted sweeping retaliation from China on Friday, including extra levies of 34 per cent on all US goods and export curbs on some rare earths, escalating the trade war between the world’s two largest economies. However, Hong Kong Financial Secretary Paul Chan told public broadcaster RTHK that Hong Kong would not impose separate countermeasures, citing the need for the city to remain “free and open”. Global stock markets plummeted following China’s retaliation and Trump’s comments on Friday that he would not change course, extending sharp losses that followed Trump’s initial tariff announcement earlier in the week and marking the biggest losses since the pandemic. For the week, the S&P 500 was down 9 per cent. “Now is the time for the US to stop doing the wrong things and resolve the differences with trading partners through equal-footed consultation,” Guo wrote in English. China’s chamber of commerce representing traders in food products called on “China’s food and agricultural products import and export industry to unite and strengthen cooperation to jointly explore domestic and foreign markets”. The metals and chemicals traders’ chamber said the tariffs “will push up the import cost for US importers and the consumption cost for consumers, exacerbate domestic inflation in the US, and increase the possibility of a US recession”. Trump’s broadest tariffs to date took effect on Saturday, with a 10 per cent “baseline” tariff hitting most US imports except goods from Mexico and Canada. Dozens of economies, including China, face even higher rates from Apr 9. The US also said on Wednesday that it will end the tax exemption for packages worth less than US$800 from the Chinese mainland and Hong Kong, starting May 2. Those products will be subjected to a duty rate of 30 per cent of their value, or US$25 per item. The China Express Association, on behalf of China’s postal and express delivery enterprises, expressed firm opposition to the US move to cancel duty-free treatment for low-value packages from China, according to its statement issued on Thursday. The association said that cross-border e-commerce packages from China have helped American consumers meet their personalised consumption needs, reduce their living costs and improve their quality of life, adding that the move will harm the interests of consumers in the United States, especially families and young people, who rely on cross-border e-commerce shopping. “We hope the United States will correct its wrong practice and take necessary measures to create a fair and predictable policy environment for the development of cross-border e-commerce and delivery,” the association said.

US stocks were battered by a steep sell-off Friday after China retaliated against the United States for President Donald Trump’s tariffs in a tit-for-tat that escalates a global trade war. The Dow plunged by 2,231 points, or 5.5%. The broader S&P 500 was 5.97% lower. The tech-heavy Nasdaq Composite was 5.82% lower. The Nasdaq closed in a bear market for the first time since 2022, down more than 20% from its record high in December. The Dow closed in correction, down more than 10% from its record high in December. It is the first time the Dow has closed in correction since March 7, 2022, according to Sam Stovall, chief investment strategist at CFRA Research. The Dow posted its biggest back-to-back losses since March 2020, during the onset of the Covid-19 pandemic. The S&P 500 shed $5.06 trillion in market value across the past two days, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. The benchmark index, which entered correction Thursday, sank more than 10% over the past two days. Investors have been fearful that a dramatic escalation of a trade war could plunge the US and global economies into a recession. JPMorgan analysts said Thursday that America’s economy and the broader world economy both had a 60% chance of sinking into a recession this year. The analysts also said odds of a recession would rise if countries began to retaliate against the United States — and China did so Friday. Retaliation raises the risk of further escalation and could diminish hopes for negotiation. “Markets may actually be underreacting, especially if these rates turn out to be final, given the potential knock-on effects to global consumption and trade,” said Matt Burdett, head of equities at Thornburg Investment Management. “The tariffs have injected a level of uncertainty and volatility we haven’t seen since the early days of the pandemic.” US stocks briefly rallied from their lowest point of the morning after Trump posted on social media that he had a “very productive call” with To Lam, the general secretary of the Communist Party of Vietnam. “(Lam) told me that Vietnam wants to cut their Tariffs down to ZERO if they are able to make an agreement with the U.S. I thanked him on behalf of our Country, and said I look forward to a meeting in the near future,” Trump said. Nike (NKE), which slumped Thursday, rallied 3%. Nike relies extensively on international supply chains and imports from Vietnam, where many of its factories are located. Yet stocks eventually slid to their lows of the day as investors grappled with the extent of Trump’s tariffs and the potential for a slowdown in economic growth. Federal Reserve Chair Jerome Powell said during prepared remarks Friday that inflation could remain elevated because of Trump’s tariffs. “While uncertainty remains elevated, it is now becoming clear that the tariff increases will be significantly larger than expected. The same is likely to be true of the economic effects, which will include higher inflation and slower growth,” said Powell, who spoke at an event just outside Washington, DC. “The size and duration of these effects remain uncertain.”

Tariff anxiety roils Wall Street

Investors Friday morning wrestled with tariff anxiety while also digesting fresh data that showed stronger-than-expected job growth in March. The US economy added 228,000 jobs in March, a significant increase from February’s revised gains of 117,000, according to Bureau of Labor Statistics data released Friday. While job growth beat expectations, tariff angst continues to drive market sentiment. “Unfortunately, the market is no longer focused on the jobs market and focused squarely on tariffs and trade wars as the US plays chicken with the rest of the world, potentially beginning a downward spiral into a worldwide recession,” said Chris Zaccarelli, chief investment officer at Northlight Asset Management. Traders ditched risky stocks, especially tech companies whose products are manufactured overseas and could soon be subject to enormous tariffs. Apple (AAPL), which tumbled more than 9% Thursday, was down another 7.3% Friday. As stock futures tumbled ahead of the opening bell, Trump posted on social media, “To the many investors coming into the United States and investing massive amounts of money, my policies will never change. This is a great time to get rich, richer than ever before!!!” Wall Street’s fear gauge, the Cboe Volatility Index, or VIX, surged 50%. “Extreme fear” was the sentiment driving markets, according to CNN’s Fear and Greed index, which slumped to its lowest level this year as investors braced for an escalating global trade war. And as investors sold stocks, they poured money into traditional safe havens, including government bonds. The 10-year Treasury yield, which briefly fell below 4% Thursday for the first time since October, fell firmly below 4% Friday as investors bought bonds to insulate themselves from a potential economic downturn. Bond prices and yields trade in opposite directions. Gold prices surged above $3,130 a troy ounce Friday morning, setting another record, before sliding to around $3,030. Gold has soared this year as investors seek out safe havens. Investors ditched other commodities, including oil, out of fear that the trade war could send the global economy into a recession. US oil, which plunged nearly 7% Thursday, tumbled another 7.4% to $61.99 a barrel. Brent oil futures, the global benchmark, fell 6.5%. Both US oil and the global benchmark settled at their lowest level since 2021.

China retaliates against Trump’s tariffs

China announced sweeping 34% tariffs on all US goods starting April 10, a major escalation of a trade war that has been raging for years between the world’s two largest economies. But the tit-for-tat tariff escalation kicked into high gear after Trump took office for the second time in January. Trump in February placed an additional 10% tariff on all Chinese goods imported to the US and doubled that rate to 20% in March. On Wednesday, Trump announced that tariffs on China would rise to 54%. That’s on top of existing import taxes, which he and former President Joe Biden already had in place on the country. So the effective tariff rate America imposes on Chinese goods will be well above 54% starting April 9. Markets have been on edge: The Russell 2000, which tracks smaller companies, entered a bear market Thursday. Stocks tumbled all over the world Friday. Europe’s benchmark STOXX 600 index dropped 5.12%, and London’s benchmark FTSE 100 index fell 4.95%, both posting their biggest single-day declines since 2020. Japan’s Nikkei 225 index fell 2.75% after falling 2.77% on Thursday. On Thursday, the Dow fell more than 1,600 points, or nearly 4%. The S&P 500 fell nearly 5% and the Nasdaq plunged nearly 6%. Each of the three major US indexes recorded its worst performance in about five years, since the Covid-19 pandemic. “This is just the tip of the spear. Next it’s going to be retaliation from the EU and other nations. Banks, airlines and other service sector firms are going to get targeted,” said RSM’s Joe Brusuelas. “The Chinese are calling Trump’s bluff.” UBS on Friday lowered its year-end target for the S&P to 5,800 from 6,400 and said the US economy could enter recession in the near-term due to the impact of Trump’s tariffs. “In the near term, we believe the effective tariff rates could be higher still, and without President Trump taking active steps to reduce tariffs over the next three to six months, we are likely to enter a downside scenario, including a meaningful US recession and lower equity markets,” said Solita Marcelli, chief investment officer for the Americas at UBS Global Wealth Management, in a note Friday.

Negotiations or more tariffs?

Trump said Thursday after the market close that he was open to negotiation on trade. He cited TikTok as an example, hoping China would agree to a sale of the popular social media app to a potential US buyer in exchange for lower tariffs. “Every country has called us. That’s the beauty of what we do, we put ourselves in the driver’s seat,” Trump told reporters aboard Air Force One Thursday. “As long as they are giving us something that’s good. For instance, with TikTok as an example, we have a situation with TikTok where China will probably say, ‘We’ll approve a deal, but will you do something on the tariffs?’ The tariffs give us great power to negotiate. They always have.” Some countries say they’re in active negotiations with the United States to lower the tariff barriers Trump announced this week. The United Kingdom, for example, said it is in talks with the United States to strike an economic agreement, British Foreign Minister David Lammy said on Friday. But other countries chose to retaliate. Canada on Thursday announced retaliatory tariffs on some US-made cars. France’s finance minister said the European Union was not considering reciprocal tariffs to respond to the Trump administration’s tariffs, because they could hurt European consumers, but the EU could target individual US companies, Eric Lombard said in an interview Friday with CNN affiliate BFMTV. The New York Times on Thursday reported the EU was considering penalties against Tesla. Trump on Thursday dismissed the massive declines in the stock market, saying it’s “to be expected” and that the economy is in a “transition period.” He called the economy a “sick patient.”