• Donald Trump announced 34% in new tariffs against China in his ‘Liberation Day’ speech. 
• Beijing responded with 34% duties on US goods, set to take effect Thursday. 
• Trump today threatened new 50% tariffs on China, sending global stocks into a third trading day of heavy losses. Hong Kong collapsed by 13.2%, but Wall Street was down less than 1% 

US President Donald Trump on Monday (Tuesday NZT) threatened new tariffs of 50% on China, ratcheting up a trade war even as a dramatic selloff in global markets gathered pace.

In late trading, the Dow was down 1.6%, the S&P 500 down 0.7% and the Nasdaq down 0.4% as the market turned negative, following early gains on rumours of a tariff pause.

Trump upended the world economy last week with sweeping tariffs that have raised fears of an international recession and triggered criticism even from within his own Republican Party.

In response to Trump’s tariffs, Beijing – Washington’s major economic rival – unveiled its own 34% duties on US goods to come into effect on Thursday.

The US President on Monday chastised China for not heeding “my warning for abusing countries not to retaliate”.

He said on social media that if China did not immediately back down “the United States will impose ADDITIONAL Tariffs on China of 50%, effective April 9th”.

President Trump signs executive orders in the Oval Office. Photo / Getty Images 

With the incoming 34% rate and new 50% threat, the total additional tariffs this year could hit 104%, the White House told AFP. 

Stock markets and oil prices collapsed further, as trading floors across the world were overcome by waves of selling after last week’s sharp losses. 

Wall Street was racked by volatility, bouncing into positive territory on hopes of a 90-day pause in tariffs, only to sink lower when those were dashed by the White House. 

Hong Kong collapses 

Hong Kong collapsed by 13.2% on Monday, its worst day in nearly three decades. 

Trillions of dollars have been wiped off combined stock market valuations in recent sessions. 

Tokyo closed down by almost 8%. Frankfurt fell as much as 10% in early trading before paring back losses. 

‘Don’t be weak’ 

“Don’t be Weak! Don’t be Stupid!” Trump urged Americans minutes before Wall Street opened. 

“Be Strong, Courageous, and Patient, and GREATNESS will be the result!” 

Trump scrapped any meetings with China over its retaliation, but said the United States was ready to open talks with all countries willing to negotiate. 

A 10% “baseline” tariff on US imports from around the world took effect on Saturday but a slew of countries will be hit by higher duties from Wednesday, with levies of 34% for Chinese goods and 20% for EU products. 

Chinese Vice Commerce Minister Ling Ji said its tit-for-tat duties “are aimed at bringing the United States back on to the right track of the multilateral trade system”. 

“The root cause of the tariff issue lies in the United States,” Ling told representatives of US companies on Sunday. 

EU trade ministers gathered in Luxembourg on Monday to discuss the bloc’s response, with Germany and France having advocated a tax targeting US tech giants. 

“We must not exclude any option on goods, on services,” said French Trade Minister Laurent Saint-Martin. 

The 27-nation bloc should “open the European toolbox, which is very comprehensive and can also be extremely aggressive,” he said. 

But signs of divergence emerged from Ireland, whose low corporate tax rate has attracted US tech and pharmaceutical companies. 

Targeting services “would be an extraordinary escalation,” said Irish Trade Minister Simon Harris. 

Inflation? Recession? 

Bitcoin tumbled, while the dollar rebounded after sharp losses last week. 

The 78-year-old Republican believes that the tariffs will revive America’s lost manufacturing base by forcing foreign companies to relocate to US soil, rather than making goods abroad. 

But most economists question his theory and say his tariff figures on importing countries are arbitrary. 

JPMorgan Chase CEO Jamie Dimon warned the tariffs “will likely increase inflation”, in a letter to shareholders. 

“Whether or not the menu of tariffs causes a recession remains in question, but it will slow down growth,” he said. 

“The market’s telling you in plain language: global demand is vanishing, and a global recession is on the cards and coming on fast,” said Stephen Innes at SPI Asset Management. 

US Senator Ted Cruz – a staunch Trump loyalist – warned of a jobs crunch and rising inflation that would threaten the Republican hold on Congress. 

Benjamin Netanyahu, Prime Minister of Israel – hit with 17% tariffs despite being one of Washington’s closest allies – was due on Monday to become the first leader to meet Trump since last week’s announcement. 

- Agence France-Presse