Equities and oil prices plummeted after Donald Trump escalated his trade war by imposing tariffs of over 100 percent on China, as sweeping measures against the United States’ numerous trading partners took effect.
Following a brief pause in panic selling on Tuesday, investors resumed fleeing the markets, fearing that Trump’s aggressive trade policies could push the global economy into a recession.
The two economic giants were on a collision course after Trump announced an additional 50 percent tariff on China in retaliation for Beijing’s countermeasures to his previous 34 percent duty, which was introduced just a week earlier. With China already facing a 20 percent tariff, its exporters now face tariffs as high as 104 percent.
China condemned the U.S. move as blackmail, vowing to “fight it to the end,” which heightened concerns that the trade conflict could spiral out of control. Forex markets were jittery as China allowed the yuan to weaken to an all-time low against the dollar, while the Indonesian rupiah also hit a record low. The South Korean won dropped to its weakest level since the 2009 global financial crisis.
The European Union is expected to unveil its response next week. French President Emmanuel Macron urged Washington to reconsider, but warned that if the EU was forced to retaliate, “so be it.” In response to the steel and aluminum tariffs imposed last month, Brussels is preparing measures that could impose tariffs of up to 25 percent on U.S. goods, including soybeans and motorcycles, according to a document reviewed by AFP.
In Asia, South Korea introduced a $2 billion emergency support package for its export-driven automotive sector, warning that Trump’s 25 percent tariffs on the industry could severely damage it.
Meanwhile, the Association of Southeast Asian Nations (ASEAN) called for bold action to accelerate regional integration, as its 10-member bloc—whose main export market is the U.S.—has also been hit with some of Trump’s harshest tariffs.
