Live Updates: Stocks in Asia and Europe Plunge as Trump Says Tariffs Will Stay
Apr 07, 2025
Current time in
London11:38 a.m. April 7
Hong Kong6:38 p.m. April 7
LiveUpdated
Live Updates: Stocks in Asia and Europe Plunge as Trump Says Tariffs Will Stay
U.S. markets were set to open sharply lower as well. President Trump said on Sunday that he would not back off his trade war, reinforcing fears of a global economic downturn.
Pinned
Updated
Yan Zhuang and
Here’s the latest.
Stocks around the world nose-dived on Monday, and the S&P 500 was poised to drop again, as President Trump signaled that he would not pull back from global tariffs that have made investors increasingly pessimistic about the economy.
Wall Street, where financial titans spent the weekend surveying the damage of last week’s sell-off, was bracing for more chaos on Monday. The S&P 500, which is already 17.4 percent below its February peak, was nearing a bear market, defined as a drop of 20 percent or more from a recent high. The benchmark U.S. index was set to open nearly 5 percent lower on Monday, according to futures trading.
The routs in global markets reflected deepening concern that Mr. Trump’s significant new taxes on U.S. imports could disrupt global supply chains, cause inflation to accelerate and spark a severe economic downturn. “There’s no sign yet that markets are finding a bottom and beginning to stabilize,” analysts at Deutsche Bank wrote in a note.
Mr. Trump on Sunday evening said that he would not ease tariffs on other countries “unless they pay us a lot of money.” He dismissed concerns that his steep new taxes on imports would lead to higher prices, calling them “a very beautiful thing.”
Here’s what else to know:
Asia and Europe: The main stock index in Hong Kong, where many mainland Chinese companies trade, plunged over 12 percent. In Taiwan, a hub for global technology, stocks lost nearly 10 percent of their value. The FTSE 100 in London and the Stoxx Europe 600 indexes were both down about 5 percent.
Oil prices: U.S. oil prices briefly dipped below $60 a barrel on Sunday, their lowest level in almost four years, in another sign of concern about a slowing economy. Cheaper oil is generally good for consumers and businesses that use gasoline, diesel and jet fuel. But if prices remain around these levels or fall further, American oil and gas companies are likely to slow drilling, cut spending and lay off workers.
Cryptocurrency: Since Mr. Trump announced his global tariffs last week, the price of Bitcoin has plunged 10 percent, dropping below $78,000 on Sunday night. The decline shows that Bitcoin, often pitched as a stable long-term source of value, is still subject to market gyrations.
Girding for a trade war: China’s leaders, after retaliating against Trump’s tariffs on Friday, said on Sunday that they were prepared for a trade war with the United States, and that China could potentially come out stronger as a result. The commentary highlights how Beijing hopes to project strength while presenting itself as a responsible global power championing fair trade.
Your money: The market turmoil has caused worry for many people, not least those nearing retirement who may need to access funds in the near future. But timing the market on this or any other basis is hazardous, experts say.
David Pierson and
China intervenes to ‘safeguard’ markets as shares tumble.
The domestic arm of China’s sovereign wealth fund, Central Huijin Investment, said on Monday that it boosted its holdings in Chinese stocks to “resolutely safeguard” the country’s capital markets.
The move appeared to be a response to a slide in share prices triggered by the Trump administration’s unveiling of sweeping global tariffs last week.
In a statement, Central Huijin did not identify the stocks it purchased, other than that they were exchange-traded funds, which are baskets of stocks that track indexes. The company said it would continue to increase its holdings in the future.
Stock benchmarks in Hong Kong, Shanghai and Shenzhen plunged on Monday, and shares of some of China’s biggest consumer technology and app companies suffered drastic losses.
Xiaomi, a smartphone maker that has branched out into electric vehicles, plummeted over 20 percent.
The e-commerce company Alibaba dropped 18 percent and Tencent, the company behind China’s most ubiquitous app, WeChat, fell 13 percent.
In a note on Monday, analysts at Morgan Stanley forecast that U.S. tariffs could have a “far greater growth drag” on China’s economy than more limited levies did in Trump’s first term. “The deflation loop is still alive,” they wrote.
Advertisement
SKIP ADVERTISEMENT
The Philippines will reduce tariffs on goods coming from the United States, its trade secretary said on Monday in Manila. “We’re meeting soon — with the economic team,” said Cristina Roque, the trade secretary, adding that she had requested a meeting several weeks ago. The Trump administration placed tariffs of 17 percent on the Philippines, one of the lowest rates of any country in Asia.
After a blowout week, Wall Street decision makers are bracing for more chaos.
There was little rest on Wall Street this weekend. There was plenty of anger, anxiety, frustration, and fear.
Anger at President Trump for a brash and chaotic rollout of tariffs that erased trillions of dollars in value from the stock market in two days. Anxiety about the state of the private equity industry and other colossal funds with global investments. Frustration among Wall Street’s elite at their sudden inability to influence the president and his advisers.
And fear of what may come next.
In conversations with The New York Times over the weekend, bankers, executives and traders said they felt flashbacks to the 2007-8 global financial crisis, one that took down a number of Wall Street’s giants. Leaving out the brutal, but relatively short-lived market panic that erupted at the start of the coronavirus pandemic, the velocity of last week’s market decline — stocks fell 10 percent over just two days — was topped only by the waves of selling that came as Lehman Brothers collapsed in 2008.
Few companies have discussed their outlooks publicly since last week’s tariff announcements, but major banks including JPMorgan and Wells Fargo will begin holding investor calls to address their earnings (and prospects) on Friday.
The uncertainty was neatly exemplified by Daniel S. Loeb, a billionaire hedge fund manager, who on Saturday wrote on X: “Sometimes market bottom when things look most bleak.”
“Not a prediction,” he added, “but keeping an open mind.”
This was the scene this morning on the trading floor of the Frankfurt Stock Exchange, where stocks opened sharply lower after the Trump adinistration doubled down on global tariffs.
Advertisement
SKIP ADVERTISEMENT
South Korea’s trade minister, Cheong In-kyo, plans to visit Washington this week to try to lower the blanket 25-percent tariff that the Trump administration imposed on goods from South Korea. During his two-day trip, Cheong is expected to meet with administration officials, including U.S. Trade Representative Jamieson Greer, to express South Korean concern about the new duties and seek ways to minimize their impact on South Korea’s export-driven economy, Cheong’s office said.
Trump’s trade war is raising the bar for the Federal Reserve to lower interest rates.
President Trump’s global trade war has significantly raised the bar for the Federal Reserve to lower interest rates, as tariffs risk worsening an already knotty inflation problem while also damaging growth.
Jerome H. Powell, the Fed chair, drove home that message in a hotly anticipated speech that came at the end of a turbulent week as financial markets melted down after Mr. Trump’s tariff plans were revealed.
The measures would lead to higher inflation and slower growth than initially expected, Mr. Powell warned during an event in Arlington, Va., on Friday. He showed concern about the souring economic outlook, but his emphasis on the potential inflationary effect of the new tariffs made clear that it was a significant source of angst.
“Our obligation is to keep longer-term inflation expectations well anchored and to make certain that a one-time increase in the price level does not become an ongoing inflation problem,” Mr. Powell said. The Fed’s mandate includes two goals, fostering a healthy labor market and maintaining low, stable inflation.
Before Mr. Trump’s return to the White House, inflation was already proving to be stubbornly sticky, staying well above the Fed’s 2 percent target. Yet the economy had stayed remarkably resilient, leading the central bank to adopt a more gradual approach to interest rate cuts that culminated in it pausing reductions in January. At that policy meeting, Mr. Powell established that the Fed would need to see “real progress on inflation or, alternatively, some weakness in the labor market” to restart cuts.
But with inflation set to soar because of tariffs, it will take tangible evidence that the economy is weakening significantly to get the central bank going again. That could mean that rate cuts are pushed off until much later this year or even delayed until next year if that deterioration takes time to materialize.
“They will not be inclined to be pre-emptive to cut rates to avoid what may be a downturn,” said Richard Clarida, a former vice chair at the Fed who is now a global economic adviser at Pimco, an investment firm. “They’re actually going to have to see an actual crack in the labor market.”
Mr. Clarida said he would look for a “material” rise in the unemployment rate or a “very sharp slowdown, if not a contraction” in monthly jobs growth to account for what he expected would be a significant lurch higher in inflation.
The latest jobs report, which was released Friday, showed that on the eve of Mr. Trump’s latest tariff blitz, the labor market was far from cracking. Employers added 228,000 jobs in March, and the unemployment rate ticked up to 4.2 percent as participation in the labor market rose.
Any enthusiasm about the latest data was quickly overtaken by a torrent of worries about the economic outlook — concerns Mr. Trump’s top economic advisers sought to address on Sunday.
Kevin Hassett, director of the White House National Economic Council, acknowledged that the president’s approach could exacerbate inflation. “There might be some increase in prices,” he said on ABC’s “This Week.” But he insisted that Mr. Trump’s plan would ultimately reverse a long-running trend of importing lower-cost products in exchange for job losses.
“We got the cheap goods at the grocery store, but then we had fewer jobs,” he said.
Scott Bessent, the Treasury secretary, also sought to downplay the prospects of a recession, telling NBC’s “Meet the Press” on Sunday that there would be an “adjustment process.”
Economists across Wall Street are much more gloomy about the outlook. Many have sharply raised their recession odds alongside their forecasts for inflation. Those economists fear that Mr. Trump’s tariffs, which are a tax on imports, will eventually decimate consumer spending, squeeze businesses’ profit margins and potentially lead to layoffs that push the unemployment rate above 5 percent.
Many in this cohort expect the Fed to lower interest rates swiftly as a result, beginning as early as June. Federal funds futures markets reflect a similar approach.
Michael Feroli, chief U.S. economist at J.P. Morgan, is calling for a recession in the second half of this year, with growth declining 1 percent in the third quarter and another 0.5 percent in the fourth quarter. Over the course of the year, he expects growth to fall 0.3 percent and the unemployment rate to rise to 5.3 percent. Even as the Fed’s preferred inflation gauge — once volatile food and energy prices are stripped out — surges to 4.4 percent, Mr. Feroli forecasts that the Fed will restart cuts in June and then lower borrowing costs at every meeting through January until the policy rate reaches 3 percent.
Jonathan Pingle, chief U.S. economist at UBS, has penciled in a percentage point worth of cuts this year even as core inflation reaches 4.6 percent. He expects the unemployment rate to shoot higher this year before peaking at 5.3 percent in 2026. Economists at Goldman Sachs projected that the Fed would deliver three consecutive quarter-point cuts beginning in July.
But there are credible risks to this outlook. The prevailing one is that the inflation shock will be just too enormous for the Fed to look past it by the summer, especially if the economy has not yet deteriorated in a meaningful way.
“The burden of proof now is higher because of the inflation situation that we’re in,” said Seth Carpenter, a former Fed economist who is now at Morgan Stanley. “They have to get enough information that convinces them that the negative effects of slowing — and possibly negative — growth outweighs the cost to them of inflation.”
Mr. Carpenter said he expected no cuts from the Fed this year but multiple next year, bringing interest rates down to between 2.5 percent to 2.75 percent. Economists at LHMeyer, a research firm, have also shelved cuts this year, assuming there is no “full-blown” recession.
Perhaps the most important determinant of when the central bank will restart rate cuts is what happens with inflation expectations. Beyond a year ahead, expectations have stayed somewhat stable, aside from some survey-based measures that are seen as less reliable than others.
If those expectations begin to wobble in a more notable way, the Fed would become even more hesitant to cut and would need to see even more economic weakness than usual, said William English, a Yale professor and a former director of the Fed’s division of monetary affairs.
Eric Winograd, an economist at the investment firm AllianceBernstein, said Mr. Powell’s inflation-focused posture on Friday would help to avoid that outcome. “The name of the game is: You talk tough,” he said. “You keep inflation expectations where they are, and, by doing that, you preserve your ability to ease later if it’s necessary.”
A higher bar for interest rate cuts could put the Fed in a tougher spot with the Trump administration, Mr. English said. Up until last week, the president had been more subdued in his criticism of the central bank, compared with his first term. He had called for lower interest rates but sought to justify them by pointing to his plans to lower energy prices, among other reasons.
But as the rout in financial markets intensified last week, Mr. Trump turned his ire back toward Mr. Powell and the Fed, in what could be a prelude of more intense pressure to come. At one point, the president appeared to suggest that the market rout was part of his strategy. He circulated a video from a user on Mr. Trump’s social media network that suggested the president was “purposely CRASHING” the markets in part to force the Fed to lower interest rates.
Pressed on the matter on Sunday, Mr. Hassett of the National Economic Council responded by saying that the Fed was independent, before adding: “He’s not trying to tank the market.”
Mr. Trump has already sought to chip away at the central bank’s longstanding independence from the White House by targeting the Fed’s oversight of Wall Street. His decision last month to fire two Democratic commissioners from the Federal Trade Commission has also reverberated widely, raising important questions about what kind of authority the president has over independent agencies and the personnel who run them.
At the event on Friday, Mr. Powell said he fully intended to serve out all of his term, which ends in May 2026. He has also previously been explicit that early removal by the president is “not permitted under the law.”
“The risk to the Fed’s independence is bigger now,” Mr. English, the Yale professor, said. “It just puts them right in the firing line.”
China’s global exports are just getting started.
For decades, the world’s largest car factory was Volkswagen’s complex in Wolfsburg, Germany. But BYD, the Chinese electric carmaker, is building two factories in China, each capable of producing twice as many cars as Wolfsburg.
Recent data from China’s central bank shows that state-controlled banks lent an extra $1.9 trillion to industrial borrowers over the past four years. On the fringes of cities all over China, new factories are being built day and night, and existing factories are being upgraded with robots and automation.
China’s investments and advances in manufacturing are producing a wave of exports that threatens to cause factory closings and layoffs not just in the United States but also around the globe.
“The tsunami is coming for everyone,” said Katherine Tai, who was the United States Trade Representative for former President Joseph R. Biden Jr.
President Trump’s steep tariffs announced on Wednesday, which have caused stocks in Asia and elsewhere to plunge, were the most drastic response yet to China’s export push. From Brazil and Indonesia to Thailand and the European Union, many countries have already moved more quietly to increase tariffs as well.
Chinese leaders are furious at the recent proliferation of trade barriers, and particularly Mr. Trump’s latest tariffs. They take pride in China’s high savings rate, long work hours and abundance of engineers and software programmers, as well as its legions of electricians, welders, mechanics, construction workers and other skilled tradesmen.
On state television Saturday night, an anchor solemnly read a government statement condemning the United States: “It is using tariffs to subvert the existing international economic and trade order” so as “to serve the hegemonic interests of the United States.”
Five years ago, before a housing bubble burst, cranes putting up apartment towers dotted practically every city in China. Today, many of those cranes are gone and the ones that are left seldom move. At Beijing’s behest, banks have rapidly shifted their lending from real estate to industry.
China is using more factory robots than the rest of the world combined, and most of them are made in China by Chinese companies, although some components are still imported. After several years of rapid growth, overall installations of new factory equipment have already jumped another 18 percent this year.
When Zeekr, a Chinese electric carmaker, opened a factory four years ago in Ningbo, a two-hour drive south of Shanghai, the facility had 500 robots. Now it has 820, and many more are planned.
As new factories come online, China’s exports are rapidly accelerating. They rose 13.3 percent in 2023 and then another 17.3 percent last year.
Lending by state banks is also financing a boom in corporate research and development. Huawei, a conglomerate making items as varied as smartphones and auto parts, has just opened in Shanghai a research center for 35,000 engineers that has 10 times as much space for offices and labs as Google’s headquarters in Mountain View, Calif.
Leaders around the world are struggling to decide whether to raise trade barriers to protect what is left of their countries’ industrial sectors.
China has been rapidly expanding its share of global manufacturing for decades. The growth came mainly at the expense of the United States and other longtime industrial powers, but also of developing countries. China has increased its share to 32 percent and rising, from 6 percent in 2000.
China’s factory output is bigger than the combined manufacturing of the United States, Germany, Japan, South Korea and Britain.
Even before Mr. Trump won a second term, Biden administration officials warned during their final year in office about industrial overcapacity in China. They raised some tariffs, notably on electric cars.
But during their first three years, Biden administration officials mostly focused on tighter export controls for technologies like high-end semiconductors, citing national security concerns. They left in place tariffs of 7.5 percent to 25 percent that Mr. Trump had imposed on half of China’s exports to the United States in his first term.
It remains uncertain how the president’s much tougher approach this time will play out. Tariffs have occasionally slowed China’s growth in exports, but not stopped it. Other nations are on high alert for the possibility that Chinese exports could be diverted elsewhere, threatening the economies of longstanding U.S. allies like the European Union and South Korea.
China’s automakers were preparing a push into the American car market in 2017, when Mr. Trump first took office. GAC Motor in Guangzhou, China, brought dozens of U.S. car dealers to the city’s auto show that November. The company announced plans to sell gasoline-powered sport utility vehicles and minivans in the United States by the end of 2019.
But GAC and other Chinese automakers canceled their plans after Mr. Trump included cars in his initial 25 percent tariffs several months later.
Chinese companies still sell almost no cars in the United States. That is unlikely to change: With Mr. Trump’s latest moves, Chinese carmakers now face U.S. tariffs as high as 181 percent.
Blocked in the United States, Chinese automakers have continued building factories and have pivoted their export campaigns elsewhere. Their sales have soared in Australia and Southeast Asia, taking market share from Japanese and American brands. In Mexico, Chinese carmakers held just 0.3 percent in 2017; by last year, it was over 20 percent.
Rapid sales gains in the European Union, and evidence of Chinese government subsidies, prompted E.U. officials last October to impose tariffs of up to 45 percent on electric cars from China.
China is not just building car factories. It has built more petrochemical refinery capacity in the past five years, for example, than Europe, Japan and South Korea together have created since World War II. And China is on track to build these refineries even faster this year. Petrochemicals are then turned into plastics, polyester, vinyl and tires.
Robert E. Lighthizer, who was the United States Trade Representative in Mr. Trump’s first term, said that the latest American tariffs “are long overdue medicine — the real root cause is decades of Chinese industrial policy that has created breathtaking overcapacity and global imbalances.”
China is exporting so much partly because its own people are buying so little. A housing market crash since 2021 has wiped out much of the savings of the middle class and ruined many wealthy families.
Tax revenues are falling, but military spending is rising rapidly. That has left the government wary of spending on economic stimulus to help consumers. China has offset its housing debacle instead with its export campaign, creating millions of jobs to build, outfit and operate factories.
Some Chinese economists have recently joined Western economists in suggesting that the country needs to strengthen its meager social safety net. At the start of this year, the minimum government pension for seniors was just $17 a month. That barely buys groceries, even in rural China.
The country’s best-known economist, Professor Li Daokui of Tsinghua University, publicly called in January for raising the minimum monthly pension several fold, to $110. The Chinese government could afford it, he argued, and extra spending by seniors would stimulate the entire economy.
Chinese officials rejected his advice. When the budget came out on March 5, it had an increase in monthly pensions — but it was just $3, bringing it to $20 a month.
The same budget included $100 billion for investments, including ports and other infrastructure that help exporters. And there was a new program to upgrade technology used in manufacturing across 20 Chinese cities.
How bad is it? Analysts at Deutsche Bank published a chart-heavy note today with some eye-opening numbers about the recent market turmoil. “It’s no exaggeration to describe last week’s market moves as historic,” they wrote.
• The two-day drop of more than 10 percent in the S&P 500 at the end of last week was the fifth-worst since World War II.
• Last week, the S&P 500 had its ninth-worst week since World War II.
• The VIX index, a measure of volatility often called Wall Street’s “fear gauge,” rose to a level rarely matched in recent decades, with the early days of the coronavirus pandemic and banking crisis of 2008-09
Some analysts are already speculating that Trump might seek a way out by delaying some tariffs. It was not “realistic” for the Trump administration to reach “meaningful agreement” with so many trading partners in such a short window of time, Alicia García-Herrero, the chief economist for Asia at Natixis, a French financial institution, wrote in a note to clients on Monday.
Once again, investors are turning to the relative safety of government bonds, pushing their prices higher and yields lower. Germany’s 10 year bond yields are down 0.1 percentage point to 2.47 percent, a big move for bond markets. U.S. 10-year Treasury yields are holding below 4 percent.
No industry is immune to this morning’s selloff in European stocks. Even shares in defense companies are plummeting. They had been performing really well recently after European governments vowed to quickly increase their defense spending. Shares in Germany’s Rheinmetall are down 9 percent, but dropped as much as 27 percent this morning. Those shares were at a record high less than three weeks ago. Shares in Italy’s Leonardo are down 13 percent.
Advertisement
SKIP ADVERTISEMENT
The Fed isn’t rushing to save the markets this time.
The notion that the Federal Reserve will rush in to rescue investors in a crisis has comforted investors for decades. But in the big market downturn induced by President Trump’s tariffs, no Fed rescue is in sight.
Jerome H. Powell, the Federal Reserve chair, made that clear on Friday. The tariffs are much “larger than expected,” he said, and their immense scale makes it especially important for the central bank to understand their economic effects before taking action.
“It is too soon to say what will be the appropriate path for monetary policy,” he said at a conference in Virginia.
For days, the market momentum has been almost entirely downward, bringing a dubious distinction in sight: a bear market, which is a decline of at least 20 percent from a market top. For the S&P 500, a bear market is already within shouting distance, a scant 2.6 percentage points away.
Investors may need to be very patient, and to hope that changes in tariff policy occur rapidly enough in Washington to turn the markets around and, more important, avert a recession.
India’s government has yet to say a word against the 27 percent tariff announced last week. In March, India offered Trump a few sops – reducing tariffs on Harley-Davidsons and Kentucky bourbon – but that didn’t spare it. Indian officials are telling reporters they are trying to speed through a bilateral trade deal, discussed between Trump and Prime Minister Narendra Modi in February.
Stocks in India fell more than 4 percent after nearly ignoring the effects of the tariffs last week when the rest of Asia was crashing. Many Indian businesses were thinking the changes might give them an advantage against Asian competitors like Vietnam and Bangladesh. But the global selloff seems to have scared everyone. The $5 trillion that Wall Street has shed is worth more than all Indian stocks combined.
Advertisement
SKIP ADVERTISEMENT
Stocks are down across the board in Europe. One sector hit particularly hard are banks as fears of a general economic slowdown, with fewer deals, takes hold. Barclays and Standard Chartered shares are down more than 7 percent. HSBC shares are down more 5 percent.
Stock markets in Europe have opened sharply lower. The FTSE 100 in London and the Stoxx Europe 600 are both down about 5 percent.
Japan became the latest nation to say it was willing to meet with President Trump to discuss the tariffs. Prime Minister Shigeru Ishiba said on Monday that he would stress that Japan “is not doing anything unfair.” Japan’s stocks fell by more than 7 percent on Monday.
China seems to be silencing domestic criticism of its countermeasures against U.S. tariffs. The Chinese Academy of Social Sciences announced on Sunday that it had shut down a research center, after a researcher there wrote on his private social media account that China’s retaliatory tariffs were “completely wrong.”
Advertisement
SKIP ADVERTISEMENT
The mayhem in Hong Kong stocks was in part a delayed reaction since the market was closed on Friday for a holiday. It was also the first chance investors had to digest China’s retaliatory move late on Friday. Bruce Pang, an associate professor at Chinese University of Hong Kong’s business school, said investors are still working through the potential fallout of the tariffs. For now, many investors are fleeing the market and heading to seemingly safer investments such as the Japanese yen and the Swiss franc. Both surged against the U.S. dollar.
Taiwan’s stock market closed down 9.7 percent despite support measures announced by the government on Sunday. The companies suffering heavy losses included some of the island’s biggest manufacturers, such as Taiwan Semiconductor Manufacturing Company, the world’s largest chip maker, and Foxconn, an Apple contractor. Taiwan’s president said on Sunday that the island’s government had no plans to impose retaliatory tariffs.
Samsung Electronics tried to downplay the impact of the tariffs on Monday, arguing that it will be nimble when deciding how to use its factories around the world. It makes TVs in Mexico, which was excluded from the latest round of levies. But the company was a pioneer in moving production to Vietnam. Samsung’s stock is down nearly 10 percent since Trump announced the 46 percent tariff on Vietnam.
Stocks in Hong Kong, where many of China’s largest companies are listed, are plunging, down more than 12 percent with about an hour of trading to go.
Advertisement
SKIP ADVERTISEMENT
South Korea’s financial regulator said it was preparing a program that would make $68 billion available to inject into markets if necessary. The worry is that the tariffs will hurt the country’s exporters as well as the companies they work with, said Kim Byoung Hwan, chairman of the Financial Services Commission.
President Trump doubled down on the steep tariffs he has imposed on other countries, comparing them to “medicine,” while speaking to reporters on Air Force One on Sunday evening. He said a deal with any country, particularly China, is only viable if the U.S. trade deficit with that nation disappears.
China downplays the trade war’s effects, and censors a critic.
China’s leaders have sent a clear message about the effects of the Trump administration’s sweeping tariffs: Things will be painful, but it is nothing that the country cannot handle.
A commentary on Sunday in the Communist Party mouthpiece, the People’s Daily, said Beijing had prepared for a trade war with the United States and that China could potentially come out stronger as a result.
“The abuse of tariffs by the United States will have an impact on China, but ‘the sky will not fall,’” it said. “China is a super economy. We are strong and resilient in the face of the U.S. tariff bullying.”
The commentary highlighted how China hopes to position itself as the tariffs cause growing economic disruption. It wants to be seen as a responsible champion of fair trade that is too powerful to succumb to U.S. pressure.
China also sought to project solidarity with other nations targeted by U.S. tariffs in another state media commentary on Sunday.
In that piece, China accused the United States of trying to “subvert the existing international economic and trade order” by putting “U.S. interests above the common good of the international community.” Washington was also advancing “U.S. hegemonic ambitions at the cost of the legitimate interests of all countries,” it said.
China’s projection of relative strength belies the grave harm the Trump administration’s tariffs could potentially inflict on the country.
Mr. Trump is bidding to transform a global trading system that China currently dominates. And exports remain the strongest engine for growth at a time when China is trying to dig itself out of a property crisis and tackle other major economic problems.
Despite that, the People’s Daily commentary argued that China was prepared to weather Mr. Trump’s tariffs because it was no longer as reliant on the U.S. market for its exports. It also said China’s banks were well capitalized and had room to inject more money into the domestic economy. And it argued that it can hit back at the United States with an array of new regulatory tools.
Some of those tools were used on Friday when China responded to Mr. Trump’s tariffs by putting 11 American companies on an unreliable entities list, and another 16 on an export control list. It also announced export controls on medium and heavy rare earths. That was in addition to slapping U.S. goods with tariffs of 34 percent to match duties imposed on Chinese goods.
China has been trying for months to engage in high-level talks with the Trump administration in preparation for a potential summit between Mr. Trump and China’s top leader, Xi Jinping. But Beijing has struggled to receive much of a response from the White House despite Mr. Trump saying earlier this year that he was open to engaging with Mr. Xi.
China’s responses to two other rounds of 10 percent tariffs imposed by the United States earlier this year were calibrated to leave the door open for negotiations. Some analysts said Friday’s countermeasures were also designed that way.
The People’s Daily commentary said China “did not close the door for negotiations,” but that it would also prepare for the worst. It said the looming crisis would compel China to continue reforming its economy to rely more on its vast domestic market.
“We must turn pressure into motivation,” it said.
For all its bravado about withstanding the American tariffs, China was also censoring criticisms of its own move to impose retaliatory tariffs.
On Friday, a researcher at the Chinese Academy of Social Sciences wrote on social media that China’s countermeasures were “completely wrong.”
“The United States is shooting itself in the foot by tariffs, so we should not shoot ourselves in the foot as well,” wrote the researcher, He Bin, who was deputy director of the academy’s Center for Public Policy Research. “The correct countermeasure is to implement unilateral zero tariffs on imports from all countries.”
Mr. He posted the comment on his personal WeChat Moments, which are visible only to his friends and somewhat akin to a private Facebook page. But a screenshot of the post quickly began circulating more widely.
Then, on Sunday, the Chinese Academy of Social Sciences announced that it was shutting down the center where Mr. He worked. It did not give a reason for the closure but cited internal regulations around the management of research centers. Those regulations state that centers, among other things, “must adhere to the correct political direction.”
Screenshots of Mr. He’s comment were also grayed out on Weibo, another social media platform.
The center may already have been under intense scrutiny: Its director, Zhu Hengpeng, was detained and removed from his posts last year after allegedly making comments critical of Mr. Xi in a private group chat, The Wall Street Journal reported in September.
On Chinese social media, nationalist commentators cheered the center’s closure and linked it to Mr. He’s comments. “Resolutely support the spirit of the central government’s directive!” wrote a military blogger with 4 million followers on Weibo.
Advertisement
SKIP ADVERTISEMENT
Oil prices tumble as Trump tariffs weigh on economic outlook.
U.S. oil prices fell sharply, briefly dipping below $60 a barrel on Sunday — their lowest level in almost four years — as the economic fallout from President Trump’s latest round of tariffs reverberated around the world.
Crude oil now costs around 15 percent less than it did last Wednesday, just before Mr. Trump revealed his plans to impose stiff new tariffs on imports from most countries. That prices have fallen so far so quickly reflects deepening concern that high tariffs could slow economic growth and perhaps even cause recessions in the United States and the countries it trades with.
Cheaper oil is generally good for consumers and businesses that use gasoline, diesel and jet fuel. In fact, Mr. Trump and his aides have pushed for lower energy prices to curb inflation.
But if prices remain around these levels or fall further, U.S. oil and gas companies are likely to slow drilling, cut spending and lay off workers. That would be especially painful to oil-rich states like Texas and New Mexico.
Another big reason that oil prices have weakened is that the OPEC cartel and its allies announced last week that they would accelerate plans to increase production. That will increase supply of oil at a time when many analysts expect demand to weaken.
U.S. energy companies are also getting squeezed by higher costs for essential materials like steel tubing, which is subject to a 25 percent tariff Mr. Trump announced in February.
Smaller oil companies — a key constituency for Mr. Trump — are likely to be among the first to slow down, as they tend to be more nimble and have fewer financial resources. Natural gas prices have been more resilient, providing some cushion for producers.
Last week, the share price of an exchange-traded fund composed of U.S. oil and gas stocks fell by 20 percent in the two days after Mr. Trump’s tariff announcement.
Bitcoin is down 10% since Trump’s global tariff announcement.
Virtually everyone in the cryptocurrency world celebrated the second election of President Trump, an enthusiastic booster of the industry who promised to turn the United States into the “crypto capital of the planet.”
But now the man nicknamed “the first Bitcoin president” is presiding over a Bitcoin crash.
Since Mr. Trump announced his global tariffs last week, the price of Bitcoin has plunged 10 percent, dropping below $78,000 on Sunday night. In January, Bitcoin reached a record price of nearly $110,000 on the day that Mr. Trump was inaugurated.
The rapid drop shows that Bitcoin, often pitched as a stable long-term source of value, is still subject to the gyrations of the broader market that has cratered since Mr. Trump announced broad import taxes last week. Many investors treat Bitcoin just like any other tech stock, a risky investment that it makes sense to sell in difficult times.
Ever since he won a second term, Mr. Trump has largely made good on his promises to help the crypto industry. He has appointed regulators who support crypto and signed an executive order directing the creation of a government stockpile of Bitcoin.
At the same time, Mr. Trump has also broadened his personal investments in the crypto world, marketing a so-called memecoin to his supporters.
But the impact of his tariffs on the crypto market has led to some disgruntlement.
“Crypto is weird, but it’s mostly correlated to optimism & risk appetite,” Haseeb Quresehi, a venture investor who specializes in crypto, wrote on social media on Sunday. “That optimism is crumbling under Trump’s silence.”
Advertisement
SKIP ADVERTISEMENT
River Akira DavisEshe Nelson and
Global stocks plunge, extending the rout caused by Trump’s tariffs.
Financial markets around the world were slammed on Monday, as investors recoiled from the prospects of a severe economic downturn sparked by the escalating trade war.
In Asia, trading was extremely volatile throughout the day. Among the markets hardest hit were Hong Kong, where stocks plunged 13 percent, and Taiwan, which tumbled 10 percent. Stocks in mainland China were down 7 percent.
Stocks in Europe were also down across the board, with the benchmark pan-European index dropping more than 5 percent.
The S&P 500 was poised to open sharply lower, down about 3 percent, futures trading implied. If that loss were to hold through the trading day in New York, the index could enter into a bear market — a drop of 20 percent or more from a recent peak. The index closed on Friday down 17.4 percent from its peak in February.
“There’s no sign yet that markets are finding a bottom and beginning to stabilize,” analysts at Deutsche Bank wrote in a note.
Fears about the global fallout from the trade war intensified as hopes faded that the Trump administration would soften the tariffs imposed on America’s major trade partners.
On Sunday evening, President Trump doubled down, saying that he would not ease his tariffs on other countries “unless they pay us a lot of money.” When asked by reporters on Air Force One about the market turmoil and fears of a recession, he said that “sometimes you have to take medicine to fix something.”
On Friday, China struck back at the United States with a 34 percent tariff on a number of American exports, matching a 34 percent tariff that Mr. Trump imposed on Chinese goods last week. China’s levies are set to go into effect later this week, shortly after the Trump administration’s “reciprocal” tariffs on dozens of countries are imposed. On Saturday, a 10 percent “baseline” tariff came into effect on nearly all goods coming into the United States.
Over the weekend, analysts had circulated notes warning that Asia could be particularly vulnerable to a tit-for-tat exchange of retaliatory tariffs between China and the United States. Many countries in the region, including Japan and South Korea, count both nations as their top trading partners.
Benchmark indexes in South Korea tumbled about 5 percent, while Australia fell more than 4 percent. In Japan, declines were so sharp that the country’s exchange operator briefly halted trading in Japanese stock futures on Monday morning. The country’s Nikkei 225 index closed down more than 7 percent.
Technology stocks across Asia were clobbered. Taiwan Semiconductor Manufacturing Company, the world’s largest chip manufacturer, fell nearly 10 percent, while Apple’s main contract manufacturer, Foxconn, also plunged 10 percent. In Hong Kong, the Chinese technology giants Alibaba, Tencent and Xiaomi all plummeted by double-digit percentages.
Japan’s Nintendo, which cited tariffs when it delayed pre-orders for the sequel to its best-selling Switch video game console, declined more than 7 percent.
In Europe, no industry escaped the sell-off. Banks were hit particularly hard, as fears of a general economic slowdown and freeze in deal-making took hold. Shares in Germany’s Deutsche Bank and Britain’s Barclays both dropped more than 7 percent.
Shares in defense companies also plummeted, no longer finding support from recent promises by European governments to ramp up military spending. Shares in Germany’s Rheinmetall were down 11 percent and shares in Italy’s Leonardo fell 9 percent.
Investors turned to the relative safety of government bonds, pushing prices higher and yields lower. Germany’s 10-year bond yields fell by a tenth of a percentage point to 2.48 percent, a big move in the bond market. U.S. 10-year Treasury yields are holding below 4 percent.
In oil markets, prices fell about 4 percent, adding to steep losses last week. And the price of copper, considered a broad economic indicator, slid nearly 2 percent.
Futures on the S&P 500, which allow investors to bet on the index before the official start of trading in New York on Monday, dropped around 4 percent on Monday morning.
The 10.5 percent drop in the S&P 500 on Thursday and Friday was the worst two-day decline for the index since the onset of the coronavirus pandemic in 2020.
The only other instances of a worse two-day drop came during the 2008 financial crisis and the 1987 stock market crash, according Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. In dollar terms, the more than $5 trillion that was wiped out in the S&P’s value in the two days last week stands unmatched.
Even more unusual is that last week’s sell-off stemmed directly from presidential policy.
The historically high tariffs that Mr. Trump announced on Wednesday caught investors, economists and businesspeople off guard, upending economic forecasts.
Chief executives have begun warning consumers that they should expect prices to increase on some groceries, clothes and other products. Consumers have said they intend to rein in spending on big-ticket items. Some auto companies have already announced production pauses overseas, as well as job losses domestically. Bank economists have raised the odds that a recession will hit the United States over the next 12 months. As countries responded last week with tariffs of their own, the sell-off in financial markets accelerated.
The hedge fund manager Bill Ackman said on the social media platform X on Sunday that he supported Mr. Trump’s attempt to fix global tariffs, but implored the president to call a “90-day time out” on Monday.
Otherwise, “we are heading for a self-induced, economic nuclear winter, and we should start hunkering down,” he said. “May cooler heads prevail.”
Keir Starmer, the British prime minister, warned on Saturday that “the world as we knew it has gone” and urged countries not to retaliate against the United States and enter a full-blown trade war.
The Nasdaq Composite index, which is chock-full of tech stocks that came under pressure as the sell-off accelerated last week, is already in a bear market, down almost 23 percent from its December peak. The Russell 2000 index of smaller companies that are more sensitive to the outlook for the economy has fallen over 25 percent from its November peak. Futures suggest both indexes will continue to sink on Monday.
Scott Bessent, the Treasury secretary, said on Sunday on the NBC program “Meet The Press” that he saw “no reason” to expect a recession.
But analysts warned that the damage to the economy will depend on how long tariffs remain at elevated levels.
“We remain very cautious,” said Stuart Kaiser, an equity analyst at Citi. Even with last week’s drop, he said, markets may have further to fall because earnings and economic growth expectations remain “well above levels consistent with announced tariff levels.”
Tony Romm contributed reporting.
Ana SwansonDanielle KayeLazaro GamioJeanna Smialek and
Still confused by the tariffs? Here is a cheat sheet.
Since re-entering office, President Trump has issued a flurry of tariffs in an effort to rewire the global economy.
On Wednesday, Mr. Trump unveiled his most aggressive policies to date, sparing few countries around the world. A 10 percent base line rate for the world went into effect on Saturday, with much higher ones for dozens of counties coming next week.
Mr. Trump’s moves have caused financial markets to plummet, foreign leaders to issue condemnations and officials to warn about inflation and slowing economic growth.
What are tariffs, and who pays for them?
A tariff is a government surcharge on products imported from other countries.
Tariffs are paid by the companies that import the goods. For example, if Walmart imports a $10 shoe from Vietnam — which faces a 46 percent tariff — Walmart will owe $4.60 in tariffs to the U.S. government.
What happens next?
Walmart could try to force the cost onto the Vietnamese shoe manufacturer, by telling it Walmart will pay less for the product.
Walmart could cut into its own profit margins and absorb the cost of the tariff.
Walmart could raise the price of the shoes at its stores.
Or, some combination of the above.
Economists found that, when Mr. Trump put tariffs on China in his first term, most of that cost was passed on to consumers. But economic studies found that his tariffs on foreign steel were a bit different; only about half of those costs were passed on to customers.
Why is Trump imposing tariffs?
The president and his advisers say their goal is to make the tariffs so painful that they force companies to make their products in the United States. They argue that this will create more American jobs and push up wages.
But Mr. Trump has also described tariffs as an all-purpose tool, forcing Canada, Mexico and China to crack down on the flow of drugs and migrants into the United States. The president also maintains that tariffs will rake in huge sums of revenue that the government can use to pay for tax cuts.
Economists say that tariffs cannot simultaneously achieve all of the goals that Mr. Trump has expressed. In fact, many of his aims contradict one another. The same tariffs that are supposed to boost U.S. manufacturing are also making life painful for U.S. manufacturers, by disrupting their supply chains and raising the cost of their raw materials.
“All of these tariffs are internally inconsistent with each other,” said Chad Bown, a senior fellow at the Peterson Institute for International Economics, a Washington think tank. “So what is the real priority? Because you can’t have all those things happen at once.”
How were the tariffs calculated?
The White House put out a complicated-looking formula, but one explanation appears to be straightforward: the gap between what America exports to a country and what it imports.
Mr. Trump’s point of view appears to be that any trade deficit — the value of goods the U.S. imports from a country, minus what the U.S. sends it as exports — is bad, and tariffs will be applied until it is eliminated.
He has long described bilateral trade deficits as examples of America being “ripped off” or “subsidizing” other countries.
In the White House tariff calculations, countries that send the United States more goods than they buy were deemed to have “unbalanced” trade and will face higher tariffs.
This formula doesn’t account for the fact that some countries are better at making certain products, a concept known as comparative advantage. And economists say it is nonsensical to force countries to exactly equalize their exports and imports to and from the United States.
How have financial markets reacted?
Wednesday’s announcement set off a global rout in stock markets as worries deepened about a trade war. Those worries were largely confirmed after China retaliated against Mr. Trump’s sweeping tariffs with steep levies of its own on U.S. goods.
The S&P 500, the benchmark U.S. index, fell 6 percent on Friday, bringing its losses for the week to 9.1 percent. It was the steepest weekly decline since the early days of the coronavirus pandemic in March 2020.
Losses were widespread, hitting technology companies as well as firms that rely on Chinese manufacturing in their supply chains. Apple shares dropped more than 13 percent over the week. Shares in Caterpillar, which makes construction equipment, tumbled nearly 11 percent.
How have U.S. trading partners responded?
China said it would impose 34 percent tariffs on all U.S. products, matching the levies that Mr. Trump announced this week on Chinese goods. It also barred 11 American companies from doing business in China, and customs authorities said that they would halt chicken imports from five of America’s biggest agricultural exporters.
The European Union said it was preparing countermeasures to the new Trump tariffs, after announcing earlier retaliatory measures that were concentrated on a wide variety of goods, including whiskey, motorcycles and women’s clothing. E.U. officials are also considering trade barriers on services, using a new trade weapon that was developed only in 2021 to target Big Tech and Wall Street.
Canada has vowed to defend its workers, businesses and economy from new tariffs and threats from Mr. Trump. Prime Minister Mark Carney recently said it was clear that the United States was “no longer a reliable partner.”
In March, after U.S. steel and aluminum tariffs took effect, the Canadian government said that it would impose new retaliatory tariffs on $20 billion worth of U.S. imports, on top of the 25 percent tariffs announced previously.
Mexico made a major effort to fend off tariffs, sending more than two dozen accused cartel leaders to the United States to face criminal charges and dispatching troops to fentanyl laboratories and the U.S. border.
Britain tried to cultivate closer ties to the U.S. but still got swept into Mr. Trump’s tariffs.
South Korea convened an emergency task force and vowed to “pour all government resources to overcome a trade crisis.”
Brazil said it was also evaluating retaliatory measures.
Australia said it would not respond with retaliatory tariffs, as Anthony Albanese, the prime minister, vowed not to “join a race to the bottom that leads to higher prices and slower growth.”
Which countries are exempt?
Russia was notably absent from the countries, large and small, that were hit with new U.S. tariffs.
Treasury Secretary Scott Bessent said Moscow was spared because sanctions imposed on the country after its invasion of Ukraine effectively halted U.S.-Russian trade.
But trade data paints a more complicated picture. Last year, Russia still exported about $3 billion worth of goods to the United States, according to U.S. trade figures, mostly fertilizer and platinum.
North Korea, Cuba and Belarus, which are also subject to tough sanctions, were also excluded from the new levies.
What happens next?
Jerome H. Powell, the chair of the Federal Reserve, warned on Friday that President Trump’s tariffs risk stoking inflation and slowing down growth.
Many analysts quickly downgraded their forecasts for economic growth, saying that tariffs would push up prices for consumers and costs for businesses, slowing demand and economic activity.
Nancy Lazar, chief global economist at Piper Sandler, estimated the U.S. economy might contract 1 percent in the second quarter. She had previously expected a flat quarter. “It’s an immediate hit to the economy,” she said.
Economists at Fitch Ratings said in a note Thursday that the tariffs had significantly raised the risk for a recession in the United States. It said that tariffs would result in higher consumer prices that would squeeze real wages and weigh on consumer spending.
How could tariffs affect consumer prices?
Mr. Trump’s tariffs target countries that supply a wide variety of goods to the United States. For American families, the very likely result is higher prices at grocery stores, car dealerships, electronics retailers and clothing outlets.
Avocados, tomatoes and strawberries imported from Mexico are some of the first places where shoppers might notice an uptick in prices.
It could take longer for prices to rise for durable goods, like cars, because of existing inventory, or if companies expect the tariffs to be temporary.
The Yale Budget Lab estimated that Mr. Trump’s new auto tariffs, which took effect on Thursday, would raise vehicle prices 13.5 percent on average, the equivalent of an additional $6,400 for the price of an average new 2024 car. In total, American households would pay $500 to $600 more, on average, as a result of the tariffs, the group estimated.
Mr. Trump has argued the price increases would be minimal compared with other economic benefits, and has repeated that sentiment. Over the weekend, the NBC News correspondent Kristen Welker asked the president whether he was concerned that tariffs could make cars more expensive. Mr. Trump replied that he “couldn’t care less.”
“If the prices on foreign cars go up, they’re going to buy American cars,” he said of consumers.
What does it mean to be American made?
Nearly half of all vehicles sold in the United States are imported, as well as nearly 60 percent of the parts used in vehicles assembled in the United States.
Since the North American free trade zone was created in 1994, American and foreign-owned automakers have built supply chains that cross the borders of the United States, Canada and Mexico.
For example, the 2024 Chevrolet Blazer, a popular sport utility vehicle made by General Motors, is assembled at a plant in Mexico using engines and transmissions that are produced in the United States.
What is the history of tariffs in the U.S.?
1789: At its founding, the United States relied heavily on tariffs to finance the federal government and protect domestic manufacturers, as proposed by Alexander Hamilton, the first Treasury secretary.
1828: The federal government passed tariffs averaging 38 percent to shield the country’s manufacturing sector from foreign competitors. These were labeled the “Tariff of Abominations” by Southern states, whose economies relied on exporting raw materials and importing manufactured goods, leading to a constitutional standoff.
1930: The Smoot-Hawley Tariff Act of 1930 was enacted after the stock market crash of 1929, in an attempt to protect U.S. businesses. Instead, as described in “Ferris Bueller’s Day Off,” the tariffs “did not work, and the United States sank deeper into the Great Depression.”
1934: Franklin D. Roosevelt signed the Reciprocal Trade Agreements Act, which gave the president the authority to negotiate bilateral trade agreements. This set the stage for more than 90 years of liberal free trade policies.
Reporting was contributed by Mark Landler, Eshe Nelson, Alexandra Stevenson, Andrew Duehren, June Kim, Karl Russell, Colby Smith, Ian Austen, Vjosa Isai, Annie Correal, Keith Bradsher and Alan Rappeport.