China vows retaliation as US tariffs spark global market fears

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Chinese officials criticised the US for using tariffs as a tool of pressure and declared they would never accept such measures. In response, China prepared to hold a high-level meeting to discuss economic support and stabilising the market.

Similarly, other countries, such as South Korea, introduced emergency measures, including tax cuts and subsidies for key sectors like automakers. Additionally, central banks in New Zealand and India cut interest rates, signalling potential global policy shifts to mitigate the tariff impacts.

Despite efforts by other nations to cushion the blow, economists warn that US consumers are likely to face higher prices on everyday goods, from sneakers to wine. For example, Bang & Olufsen, a Danish luxury stereo maker, announced price hikes due to the tariffs. A recent Reuters/Ipsos poll found that nearly 75% of Americans expect prices to rise in the next six months.

The full effects of the tariffs will take time, as goods already in transit by the time the new levies were enforced will be exempt if they arrive in the US by 27 May 2025.

US President Donald Trump’s tariffs, which include a significant increase on Chinese goods, are part of his broader strategy to address trade imbalances and what he calls unfair trade practices.

The latest round of tariffs targeted countries the US accuses of "ripping off" America, including European Union nations, which were hit with a 20% tariff. The European Union is preparing countermeasures, and Trump has also accused countries like Japan of devaluing their currencies to gain a trade advantage, though Japan denies this.

Tariffs trigger market turmoil

Trump’s tariffs have caused turmoil in global financial markets, triggering widespread selling and leading to concerns about a potential recession. The S&P 500 has faced its biggest loss in decades, and global bonds saw forced selling, raising alarms among investors. German officials warned that the trade tensions could push the economy into another recession, and investment bank JP Morgan estimated a 60% chance of a global recession by year-end.

Despite the turmoil, Trump remains resolute about the tariffs. He boasted that the measures are pressuring other leaders to negotiate, claiming that many countries are eager to strike deals with the US. Talks are scheduled with South Korea, Japan, and other major trading partners, but stock markets had already lost their gains by the end of the day.

Trump’s tariffs are also extending beyond imports to pharmaceuticals, with the president signalling that major new tariffs on pharmaceutical goods will be announced soon. These moves have heightened fears about the broader economic impacts, including recession risks, and raised questions about how long such trade strategies can persist without causing more significant harm to global economies.