Trade war escalates as China and EU push back against US tariffs

[WORLD] China promised not to give in to "blackmail" from the United States as a global trade war sparked by US President Donald Trump's hefty tariffs showed no indication of abating on April 8, even as battered world markets stabilized.

The reprimand came after Mr Trump vowed to raise tariffs on US imports from the world's second largest economy to more than 100% on April 9 in reaction to Beijing's decision to match Mr Trump's initial "reciprocal" levies announced last week.

The escalating tensions have drawn concern from international organizations, including the World Trade Organization (WTO), which warned that the tit-for-tat measures could disrupt global supply chains and harm growth prospects for emerging economies. WTO Director-General Ngozi Okonjo-Iweala urged both nations to return to negotiations, emphasizing that "no one wins in a trade war."

“The US side’s threat to escalate tariffs against China is a mistake on top of a mistake, once again exposing the American side’s blackmailing nature,” China’s Commerce Ministry said in a statement.

“If the US insists on going its own way, China will fight it to the end.”

The European Union suggested its own counter-tariffs in response to Mr Trump's tariff onslaught, which swept up dozens of countries, drove financial markets into a spiral, and fueled fears that the global economy was on its way to recession.

Analysts note that the EU’s targeted response—focusing on agricultural goods—appears designed to pressure politically sensitive sectors in the US, particularly ahead of the 2024 election. "This is a calculated move to hit rural constituencies that form a key part of Trump’s base," said Claudia Tessier, a trade policy expert at the Brussels-based European Centre for International Political Economy.

Stock markets began to stabilize following a tumultuous few days for investors, prompting several corporate executives, including those close to Mr Trump, to encourage the President to change course.

Japan's Nikkei market climbed 6% on April 8, rebounding from a 1½-year bottom hit the previous session, after Mr Trump and Japanese Prime Minister Shigeru Ishiba agreed to initiate trade negotiations via phone on April 7.

Behind the scenes, diplomatic efforts are intensifying. Sources familiar with the matter say China has quietly reached out to European and Asian allies to explore a coordinated response, though no formal alliance has yet materialized. "Beijing is testing the waters for a multilateral pushback," one diplomat noted, speaking on condition of anonymity.

US Secretary of State Marco Rubio also met with his Pakistani counterpart about tariffs and future trade relations. Chinese blue chips rose 1%, recouping a portion of their more than 7% drop on April 7. Hong Kong's Hang Seng Index rose 2% after experiencing its worst day since 1997 as a result of what the trading hub's leader described as "ruthless" levies.

US stock futures also rose following a roller-coaster day in which they reached their lowest level in more than a year. Indonesia's markets were rocked, with stocks dropping 9% and the rupiah plunging a record low as trade reopened on April 8 following an extended break.Its central bank pledged to intervene, joining efforts by other global authorities to stem the rout in recent days.

Mr Trump stated that the tariffs - a minimum of 10% on all US imports, with targeted rates of up to 50% - would help the US reclaim an industrial base that he claims has shriveled as a result of decades of trade liberalization.

Critics argue that the tariffs could backfire by raising consumer prices and disrupting US manufacturing reliant on imported components. A study by the Peterson Institute for International Economics estimated that the new measures could cost the average American household up to $1,000 annually if fully implemented.

"It's our country's last chance to start over. Because no other president would be willing to do what I'm doing, let alone go through it," he told reporters at the White House.

Meanwhile, the European Commission proposed 25% counter-tariffs on a variety of US commodities, including soya beans, almonds, and sausages, but other prospective categories, such as bourbon whiskey, were left off the list, according to a document seen by Reuters.

Officials indicated they were prepared to negotiate a "zero for zero" agreement with Mr Trump's government. "Sooner or later, we will sit down with the US and find a mutually acceptable compromise," EU trade commissioner Maros Sefcovic said during a press conference.

The 27-member bloc is struggling with tariffs on vehicles and metals already in place, and faces a 20 per cent tariff on other products on April 9. Mr Trump has also threatened to slap tariffs on EU alcoholic drinks.

Investors and political leaders have battled to assess whether Mr Trump's tariffs are permanent or merely a pressure strategy to extract concessions from other countries.

According to Politico, US Treasury Secretary Scott Bessent met with President Trump in Florida on April 6 to urge him to prioritize completing trade deals with allies in order to reassure investors that the US policy has an endgame.

According to administration officials, scores of foreign countries have contacted them in the hopes of delaying the duties, which are set to go into effect on April 9. Officials in the Trump administration say the President is keeping his promise to reverse decades of trade liberalisation that he believes has harmed the US economy.

“He’s doubling down on something that he knows works, and he’s going to continue to do that,” White House economist Kevin Hassett said on Fox News.

“But he is also going to listen to our trading partners, and if they come to us with really great deals that advantage American manufacturing and American farmers, I’m sure he’ll listen.”

Wall Street leaders issued warnings about US tariffs, with JPMorgan Chase CEO Jamie Dimon claiming they might have long-term negative implications and fund manager Bill Ackman predicting a "economic nuclear winter".

Mr Ackman is one of a few Trump backers who have questioned the strategy. Billionaire Elon Musk, who is leading President Trump's push to reduce government expenditure, called for zero tariffs between the United States and Europe over the weekend.

According to the Washington Post, Mr Musk has also made a direct appeal to President Trump to repeal the tariffs.

On April 7, Trump trade adviser Peter Navarro referred to Tesla CEO Elon Musk as a "car assembler".

Investors are now betting that the growing risk of recession could prompt the US Federal Reserve to cut rates as early as May. Mr Trump repeated his call for the central bank to lower rates on April 7, but Fed chief Jerome Powell has so far indicated he is in no rush.