China hits US with massive tariffs as Wall Street plummets
The US stock market cratered for the second straight day as China whacked America with whopping tariffs and the UK seeks a new trade deal.
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Donald Trump has stood by his sweeping global tariffs after China hit back at the US with a 34 per cent tariff on American goods, promising investors that his “policies will never change”.
In a string of all-caps Truth Social posts, the US President argued his duties will withstand the test of the markets, which plunged yet again on Friday local time during the first hour of trading.
“CHINA PLAYED IT WRONG, THEY PANICKED – THE ONE THING THEY CANNOT AFFORD TO DO!” he wrote.
In an earlier post, the US President told “THE MANY INVESTORS COMING INTO THE UNITED STATES AND INVESTING MASSIVE AMOUNTS OF MONEY, MY POLICIES WILL NEVER CHANGE.
“THIS IS A GREAT TIME TO GET RICH, RICHER THAN EVER BEFORE!!!”
However, President Trump was much happier with the response of Vietnam after sharing s “productive call” top official, who he said “wants to cut their Tariffs down to ZERO” pending a free-trade agreement.
Mr Trump posted about his discussion with To Lam, Communist Party of Vietnam general secretary, On Truth Social and as a result, shares in Nike, Lululemon, and American Eagle – all of which have large manufacturing operations in the country – received a boost.
“Just had a very productive call with To Lam, General Secretary of the Communist Party of Vietnam, who told me that Vietnam wants to cut their Tariffs down to ZERO if they are able to make an agreement with the US,” Mr Trump posted on Truth Social.
“I thanked him on behalf of our Country, and said I look forward to a meeting in the near future.”
UK SEEKS NEW TRADE DEAL WITH US
British Prime Minister Keir Starmer is pushing for a new trade deal with the US in order to eliminate tariffs between the two countries altogether.
As part of Trump’s measures, the UK has been hit with a 10 per cent reciprocal tariff on exports - the lowest reciprocal rate levied.
In commenting on the move UK trade secretary Jonathan Reynolds said: “We are, of course, disappointed by the increase in tariffs on the UK, and on other countries around the world. The impact will be felt amongst all trading nations,”.
Reynolds said the trade negotiations with the Trump Administration were “far from done” and that seems very much to be the case with reports coming through on Saturday that Starmer will look to completely reset his country’s trade relationship with America.
The Dow Jones Industrial Average plunged more than 1,400 points in the first 70 minutes of trading Friday, as investors anticipated more retaliatory tariffs from foreign countries in response to Mr Trump’s announcement on Wednesday local time.
China’s move, announcing 34 per cent tariffs on key rare materials has further heightened the trade war between Washington and Beijing.
The new tariffs on imports of all US products will be imposed from April 10.
“For all imported goods originating from the US, an additional tariff of 34 per cent on top of the current applicable tariff rate will be imposed,” Beijing’s finance ministry said.
As part of the flurry of retaliatory measures, Beijing’s Commerce Ministry also said it would impose more export controls on rare earth elements, including gadolinium — commonly used in magnetic resonance imaging (MRI scans) — and yttrium, which is used in consumer electronics such as computer chips and electric vehicle batteries.
China will also file a lawsuit with the World Trade Organisation (WTO) over tariffs, the ministry said.
“The purpose of the Chinese government’s implementation of export controls on relevant items in accordance with the law is to better safeguard national security and interests, and to fulfil international obligations such as non-proliferation,” the Commerce Ministry said.
“The United States’ imposition of so-called ‘reciprocal tariffs’ seriously violates [World Trade Organisation] rules, seriously damages the legitimate rights and interests of WTO members, and seriously undermines the rules-based multilateral trading system and international economic and trade order.
“It is a typical unilateral bullying practice that endangers the stability of the global economic and trade order. China firmly opposes this.”
It comes after Mr Trump announced a 10 per cent baseline tariff on all imports to the US, as well as higher duties on some of the country’s biggest trading partners — ranging from premium Italian coffee and Japanese whisky to sportswear made in Asia.
Mr Trump, who argued the “reciprocal” tariffs were a response to duties and other non-tariff barriers put on US goods, insisted they would boost manufacturing jobs at home.
“This is one of the most important days, in my opinion, in American history. It’s our Declaration of Economic Independence,” the president said of the announcement.
In the aftermath, US Treasury Secretary Scott Bessent was quick to warn countries not to react with kneejerk retaliation.
“Everybody, sit back, take a deep breath, don’t immediately retaliate. Let’s see where this goes because if you retaliate, that’s how we get escalation,” Mr Bessent told CNN.
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TIKTOK BUYER PULLS OUT DUE TO TRUMP TARIFFS
President Trump’s plan to secure a US buyer for TikTok was “finalised” earlier this week – before his announcement of global tariffs scrapped the deal, a source familiar with the talks told The New Post.
By Wednesday, Trump officials had worked out an arrangement for Trump to sign an executive order authorising the sale of the social media app from its Chinese parent company ByteDance to a company majority-owned by US investors.
That would have moved the Beijing-based firm into a minority-ownership position, in line with legislation forcing the qualified divestment that had been passed by Congress and signed by then-President Joe Biden.
It also would have extended a Saturday deadline for the sale by another four months to figure out the financing and complete required paperwork.
But Trump’s decision to follow through on his baseline tariffs – with additional 34 per cent duties on China – prompted ByteDance reps to call off the deal, pending further negotiations on the trade dispute.
Vice President JD Vance had led discussions on the Tiktok sale for months, courting several American investors.
AMERICAN CAR MAKER CASHES IN ON TARIFFS
Ford, who makes around 80 per cent of its cars on US soil, has offered customers a steep deal to celebrate their American-made vehicles.
Mr Trump has placed a 25 per cent tariff on foreign-made cars, putting Ford at an advantage, although their overseas manufactured parts will still attract the import duty.
All customers will be entitled to the same discount as employees until June 2 which translates to up to A$16,000 off some vehicles.
US STOCK MARKET PLUNGES FOR SECOND STRAIGHT DAY
The US stock market took another brutal beating on Friday local time as stocks plunged after China unveiled stiff retaliatory taxes in response to Mr Trump’s tariffs – threatening a global trade war.
The Dow Jones Industrial Average was down nearly 1,000 points shortly after the opening bell — a day after suffering a 1,679 drop, its worst session since the start of the COVID-19 pandemic in 2020.
The tech-heavy Nasdaq stumbled out of the gate by about 500 points, or 2.3 per cent, while the broadbased S&P 500 was down 130 points, or 2.4 per cent.
JPMorgan has raised its estimated risk of a recession by the end of the year to 60 per cent.
Global stock markets also continued on a descent as investors fear that Trump’s reciprocal tariff plan – a 10 per cent baseline tax and much harsher rates for many nations – could stoke inflation and even a recession.
The White House urged investors to stick behind Mr Trump’s policies.
“To anyone on Wall Street this morning, I would say trust in President Trump,” White House Press Secretary Karoline Leavitt said in an interview on CNN.
“This is a president who is doubling down on his proven economic formula from his first term… this is indeed a national emergency… and it’s about time we have a president who actually does something about it.”
The 10 per cent across-the-board tax is set to take effect after midnight on Saturday eastern US time (2am AEST), while the higher rates – including a 20 per cent tariff on the 27-nation European Union, 24 per cent on Japan and 17 per cent on Israel – won’t take hold until April 9, which Mr Trump has signalled gives countries time to come to the negotiating table.
However, the potential for rates to be negotiated downward didn’t do enough to quell markets.
The CBOE Volatility index, known as Wall Street’s fear gauge, hit its highest level since August 2024.
“We’re beginning to see the inevitable retaliation from the global trade partners of the United States. The risk is that this tips a recession scare into a full-blown recession,” said Ben Laidler, head of equity strategy at Bradesco BBI.
The tariffs have fuelled expectations for a global economic downturn and sharp price hikes across sectors in the world’s biggest consumer market.
Bank stocks in the United States dropped further on Friday local time, with the sector under pressure globally as investors anticipated more interest rate cuts from central banks and a hit to economic growth from tariffs.
Bank of America, JPMorgan Chase and Citigroup all fell around 5 per cent each. The yield on the benchmark 10-year Treasury notes was down to a six-month low of 3.95 per cent.
Traders continued to anticipate a more accommodative policy from the central bank, with money market futures pricing in cumulative rate cuts of 100 basis points by the end of this year, compared with about 75 bps a week earlier.
“Looking at cross-asset reactions, the market is actually pricing in the real risk of a recession here,” Mr Laidler said.
NINTENDO DELAYS CONSOLE PREORDERS
Meanwhile, Japanese gaming giant Nintendo said it was delaying preorders of its hotly anticipated Switch 2 gaming console as it assesses the fallout from the Trump administration’s trade tariffs.
“Preorders for Nintendo Switch 2 in the US will not start April 9, 2025 in order to assess the potential impact of tariffs and evolving market conditions,” the company said, adding that the launch date of June 5 remains unchanged.
Nintendo revealed details about the Switch 2 on Wednesday, announcing an update to the hugely successful 2017 original that has sold over 150 million units.
But shares in the Kyoto-based company tanked in the days following the announcement, partly because the recommended retail price — $449.99 (A$735) in the United States — is at least a third more than its predecessor.
Nintendo shares were also battered in the wake of Mr Trump’s sweeping levies.
These include 46 per cent on Vietnam and 49 per cent on Cambodia — countries where Nintendo has reportedly shifted an increasing share of its production in recent years.
Mr Trump said Vietnam’s top leader told him in a “very productive” phone call that he wanted to make a deal on tariffs.
The original Switch was an all-ages hit thanks to its hybrid concept, which allows players to use it on the go and connect to a TV.
– with AFP
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