Trump defiant amid crushing Wall Street losses as China retaliates

A Wall Street bloodbath slashed the S&P 500 by 6 per cent in its worst crisis since the Covid crash, after China matched President Donald Trump’s big raise in tariffs announced earlier this week.

Xi Jinping’s China has fired back at Donald Trump’s tariff plan in an escalating global trade war that sent markets deep into the red. Picture: AFP

Donald Trump has goaded a “panicked” China after Beijing retaliated against his tariffs and he dismissed stock market panic over the growing global trade war, touting the chance to “get rich.”

“China played it wrong, they panicked — the one thing they cannot afford to do!” Mr Trump posted on Truth Social, writing the message in his trademark all-caps.

For a second day, markets plunged, wiping vast sums off investment and retirement portfolios alike.

The S&P 500 tumbled 6 per cent as Wall Street’s worst crisis since the COVID crash deepened after China matched President Donald Trump’s big raise in tariffs announced earlier this week. The move increases the stakes in a trade war that could end with a recession that hurts everyone. Not even a better-than-expected report on the US job market, which is usually the economic highlight of each month, was enough to stop the slide.

The Dow Jones Industrial Average plunged 2231 points, or 5.5 per cent, and the Nasdaq composite was 5.8 per cent lower at the close of trade.

The Australian dollar plunged nearly US3c in one day, to US60.40c, as markets sweat on the potential fallout for Australia’s economy, given its close trade ties with China.

US Federal Reserve Chairman Jerome Powell warned the tariffs were likely to spur “higher inflation and lower growth.”

The US president, who unveiled his barrage of import duties against dozens of countries Wednesday, was unrepentant, posting that “my policies will never change.”

“This is a great time to get rich, richer than ever before,” he wrote.

The 78-year-old Republican, who was spending a long weekend golfing at his course in Palm Beach, Florida, is banking on the theory that the sheer might of the world’s biggest economy will force foreign companies to manufacture on US soil, rather than continue to import goods.

However, China responded toughly, announcing its own new 34 per cent tariffs on US imports starting April 10.

Beijing said it would sue the United States at the World Trade Organisation and also restrict export of rare earth elements used in high-end medical and electronics technology.

Other big US trading partners have so far held back as they digest the unfolding international standoff and fears of recession.

EU trade chief Maros Sefcovic told his US counterparts that Mr Trump’s new 20 per cent tariffs on the bloc were “unjustified”, as he reiterated the EU’s commitment to “meaningful negotiations”.

After a “frank” two-hour exchange with US Commerce Secretary Howard Lutnick and US trade envoy Jamieson Greer, Mr Sefcovic wrote on X: “I was clear: US tariffs are damaging, unjustified. The (EU-US) trade relationship needs a fresh approach. The EU’s committed to meaningful negotiations but also prepared to defend our interests. We stay in touch.”

EU examines options

France and Germany have said the 27-nation EU could respond by imposing a tax on US tech companies.

Economy Minister Eric Lombard urged French companies to show “patriotism” after President Emmanuel Macron argued it would send the wrong message if they pressed ahead with investments in the United States.

Mr Lombard said the EU’s retaliation would not necessarily involve tit-for-tat tariffs and could use other tools, pointing to data exchange and taxes instead.

In Tokyo, Prime Minister Shigeru Ishiba called for a “calm-headed” approach after Trump slapped 24 per cent tariffs on Japanese-made goods.

Mr Trump said he’d had a “very productive” call with Vietnam’s top leader after the southeast Asian manufacturing hub was hit with extraordinary 46 per cent US duties.

Cars clash

Separate US tariffs of 25 per cent on all foreign-made cars also went into effect this week, and Canada swiftly responded with a similar levy on US imports.

Stellantis — the owner of Jeep, Chrysler and Fiat — paused production at some Canadian and Mexican assembly plants.

Japanese carmaker Nissan said on Friday it would revise plans to reduce production in the US.

The company also said it would stop selling two vehicle models on the US market that are made at a factory in Mexico.

Sweden’s Volvo Cars, owned by China’s Geely, said it would increase its production of vehicles in the United States and probably produce an additional model there.

Economy fears

Mr Powell’s, the federal reserve chair, comments Friday reflected growing concern that the trade war shockwaves will extend deep into the US economy.

“It is now becoming clear that the tariff increases will be significantly larger than expected,” Mr Powell said in a speech.

“The same is likely to be true of the economic effects.”

Minutes before Mr Powell suggested the Fed would continue to hold off from cutting its benchmark lending rate, Mr Trump pressured him to do so.

“CUT INTEREST RATES, JEROME, AND STOP PLAYING POLITICS!” he posted — once again defying the longstanding custom in which the White House respects the central bank’s independence.

In a more concrete sign of how tariffs are impacting trade, Nintendo announced it was delaying preorders of its hotly anticipated Switch 2 gaming console while it assesses “evolving” conditions