President Donald Trump escalated trade tensions on Monday by threatening to impose an additional 50% tariff on Chinese imports if Beijing does not rescind its retaliatory trade measures.
The announcement added to market uncertainty as investors reacted to the possibility of further disruptions in global trade.
Last week, the US imposed new tariffs on multiple countries, including a 34% duty on Chinese goods. In response, China announced its own 34% tariff on American products. Trump, in a post on Truth Social, warned that if Beijing does not reverse its trade measures by April 8, the US will implement additional tariffs, bringing the total duties on some Chinese imports close to 130%.
“Additionally, all talks with China concerning their requested meetings with us will be terminated!” Trump stated.
The stock market exhibited significant volatility following the announcement. After three consecutive days of losses, US stock indexes briefly rebounded on reports that the White House might pause tariffs on all countries except China. However, markets retreated again when officials dismissed those reports.
By late morning on Monday, major indexes were experiencing further declines. The S&P 500 dropped more than 3% at the opening bell, while the tech-heavy Nasdaq fell 3.9%. The Dow Jones Industrial Average was down approximately 3%, placing all three indexes in bear market territory.
The increased uncertainty surrounding trade policy has contributed to the market’s instability. Investors are navigating the effects of new tariffs and the potential for further economic consequences.
“Markets won’t rebound until tariffs are negotiated and reduced, until valuations move even lower, and until fundamentals improve,” said Richard Saperstein, chief investment officer at Treasury Partners.
Globally, the European stock market also faced losses as trade ministers in the European Union discussed potential responses to the ongoing trade conflict. Germany’s DAX index initially fell nearly 10% before recovering slightly, while the Stoxx 600 dropped more than 4%.
Amid the turmoil, some analysts speculated that the Federal Reserve might intervene with emergency measures if economic conditions deteriorate further. However, concerns about inflation complicate the possibility of immediate action.
Trump defended his trade policies, stating that short-term economic pain was necessary to address what he described as long-standing unfair trade practices.
“Sometimes you have to take medicine to fix something,” he said while aboard Air Force One.
With input from Reuters and the Washington Post.
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