Just a day after president Donald Trump sent global markets reeling with his promise of a fresh 100 per cent tariff on Chinese imports, Beijing has struck back, accusing the US of “double standards” and warning that it could introduce its own countermeasures.
A spokesperson for China’s Commerce Ministry said Washington’s threat to punish Beijing over tightened rare earth export rules was “not the right way” to engage with China.
While the comments echoed the language of the recent trade war, they also served as a stark reminder that Beijing is not backing down. “We do not want a tariff war, but we are not afraid of one”, the spokesperson said.
Markets react as uncertainty mounts
The timing could be better for markets already rattled by Trump’s announcement on Truth Social yesterday, which promised to pile a 100 per cent levy on top of the existing 30 per cent tariffs on Chinese goods.
The S&P 500, Dow Jones, and Nasdaq all dropped on Friday, with the tech-heavy Nasdaq tumbling 3.5 per cent.
Meanwhile, in Europe, the FTSE 100, DAX, and CAC 40 all closed in the red.
Trump, meanwhile, suggested that Beijing is trying to “hold the world captive” with its rare earth export controls, raising the prospect that a planned summit with President Xi Jinping later this month could be in jeopardy.
While both sides may be posturing ahead of trade talks, but the uncertainty has already injected fresh volatility into global markets.
Economists and market watchers are keeping a wary eye on how these tensions intersect with other headwinds.
Jamie Dimon, chief executive of JP Morgan, warned that AI stock valuations are reminiscent of the dot-com bubble, while the Bank of England and IMF have highlighted the risks of a sharp correction.
James Reilly of Capital Economics notes that while the S&P 500 remains close to its all-time high, investors are increasingly pricing in the risk of a US recession over the next year.