Global financial markets have taken a sharp hit as the escalating trade dispute between the United States and China sends shockwaves through investor confidence and threatens to derail global economic recovery.
The latest tremors followed a dramatic ultimatum issued by President Donald Trump on Monday, demanding that China withdraw its 34% retaliatory tariff by Tuesday or face an additional 50% levy on all its exports to the United States. The warning came just days after the US imposed a 34% tariff on Chinese goods, part of Trump’s broader “Liberation Day” policy, which also introduced a minimum 10% tariff on imports from nearly all American trading partners.
“If China retaliates,” Trump warned in a Truth Social post, “they will be immediately met with new and substantially higher Tariffs.” He further stated that “all talks with China concerning their requested meetings with us [on tariffs] will be terminated!”
Beijing responded swiftly, accusing Washington of engaging in “economic bullying.”
“The US hegemonic move in the name of ‘reciprocity’ serves its selfish interests at the expense of other countries’ legitimate interests and puts ‘America first’ over international rules,” said Chinese embassy spokesman Liu Pengyu. “This is a typical move of unilateralism, protectionism and economic bullying.”
Markets did not wait for the Tuesday deadline to react. Wall Street opened to steep losses, with the S&P 500 sliding into the red yet again. European markets mirrored the turbulence, with London’s FTSE 100 falling more than 4% by close. The selloff was particularly brutal in Asia, where Hong Kong’s Hang Seng index plummeted over 13% its worst single-day drop since the 1997 financial crisis.
While some Asian markets saw a modest recovery on Tuesday, volatility remains high across all major indices, reflecting deep investor anxiety over the potential fallout from an entrenched trade war between the world’s two largest economies.
If Trump’s proposed 50% hike takes effect, some Chinese goods could face a cumulative tariff of 104% when combined with existing duties, including a 20% import tariff imposed in March and the recent 34% hike. That kind of tariff burden could have serious implications for US-based importers, global supply chains, and price stability.
Despite the turmoil, President Trump signaled no willingness to back down or pause global tariffs to allow for diplomacy. “We’re not looking at that,” he told reporters at the White House. “We have many, many countries that are coming to negotiate deals with us, and there are going to be fair deals.”
Echoing his hardline stance, Trump added, “It’s now America first… We have $36 trillion debt for a reason,” emphasizing that the tariffs are part of a broader strategy to secure more favorable trade terms and reduce the trade deficit.
Analysts warn, however, that such sweeping tariffs could backfire hurting American businesses and consumers alongside Chinese manufacturers. China’s top exports to the US include electronics, computers, toys, and vehicles, while US exports to China focus on agricultural products, aircraft, and pharmaceuticals.
Beijing made it clear that it would not be intimidated. “Pressuring or threatening China is not a right way to engage,” the Chinese embassy stated, reaffirming the country’s commitment to defending its “legitimate rights and interests.”
