Beijing slaps 34% levy on U.S. imports in tit-for-tat response to Trump’s trade offensive, triggering market turmoil and global economic alarm
China has fired a fierce counterstrike in its escalating trade standoff with the United States, imposing a sweeping 34% additional tariff on all American imports. The move came in direct response to former President Donald Trump’s dramatic tariff hike earlier this week — a decision that has sparked widespread fears of a global recession and sent shockwaves through financial markets worldwide.
Global stock indices have taken a massive hit, with nearly $5 trillion wiped off the value of shares since Trump’s announcement in the Rose Garden. The FTSE 100 in the UK plunged more than 7% this week — its steepest decline since the early days of the COVID-19 panic in 2020.
The economic duel between the world’s two largest economies is raising alarm among policymakers and analysts alike, many of whom are warning that the fallout could severely impact international trade, growth, and consumer confidence.
Economic Warnings from All Sides
Federal Reserve Chair Jerome Powell issued a blunt warning, saying the tariffs are likely to drive inflation up while dragging economic growth down. “Uncertainty remains high,” he said in a Friday speech. “But it is becoming clear that the scale and economic consequences of these tariffs are larger than initially anticipated.”
The International Monetary Fund echoed those concerns. “This escalation poses a real threat to an already fragile global economy,” said IMF Managing Director Kristalina Georgieva. “Further steps in this direction could cause more damage and increase uncertainty.”
Trump’s Aggressive Strategy Fuels Tensions
Trump’s latest move involved adding a 34% levy to Chinese goods already subject to a 20% tariff — taking total duties to 54%. He also extended tariffs to Southeast Asian countries like Vietnam, Cambodia, and Thailand, which serve as trade routes for Chinese exports into the U.S.
Posting on Truth Social, Trump dismissed China’s retaliation. “CHINA PLAYED IT WRONG, THEY PANICKED – THE ONE THING THEY CANNOT AFFORD TO DO!” he wrote defiantly.
He also renewed his pressure on the Federal Reserve to intervene. “CUT INTEREST RATES, JEROME, AND STOP PLAYING POLITICS!” he posted online.
Global Repercussions Grow
In the U.S., Wall Street ended the week in a nosedive. The tech-heavy Nasdaq officially entered bear market territory after plunging more than 20% from recent highs. On Friday alone, it sank by 5.8%, while the S&P 500 tumbled 9.1%, the worst five-day stretch since March 2020.
Oil prices dropped sharply amid downgrades in growth forecasts. Brent crude was down 7%, hovering around $65 per barrel.
Meanwhile, JP Morgan revised its global outlook, warning that the probability of a recession by year-end has jumped from 40% to 60%.
UK Seeks Trade Relief
British Chancellor Rachel Reeves said the UK government was in active talks with Washington to reverse the newly imposed 10% tariffs on UK exports. She hinted at potential concessions, including a revision of the digital services tax levied on big tech companies.
“We are committed to securing the best possible outcome for British industries and safeguarding jobs,” Reeves said.
Markets are now betting on three interest rate cuts by the Bank of England before year-end, with some economists warning that Reeves may need to raise taxes this autumn if growth projections weaken further.
Beijing Rejects “Bullying Tactics”
China’s state council accused the U.S. of violating global trade norms. “This unilateral and bullying behavior seriously undermines China’s legitimate rights,” the government declared in a strongly worded statement.
Despite warnings about price hikes for American consumers, Trump remains steadfast in his tariff-heavy approach, claiming it will lead to a resurgence in U.S. manufacturing.
Still, analysts caution that rising consumer prices and investor uncertainty could dampen domestic demand — and hurt export-reliant economies from Asia to Europe.
Mixed Signals from the White House
Trump’s messaging remains characteristically unpredictable. On the same day he vowed that his “policies will never change,” he later posted about a “very productive call” with Vietnamese President To Lam, claiming the leader had agreed to reduce his country’s tariffs on U.S. goods.
U.S. Secretary of State Marco Rubio appeared unfazed by market chaos. “Markets are falling because they’re tied to outdated production systems,” he argued, suggesting this disruption is part of a necessary economic reset.
Outlook Remains Clouded
Some UK economists suggest the direct impact of the tariffs on British GDP may be minimal — roughly 0.2% — but caution that knock-on effects from a global slowdown could be more severe.
With no signs of de-escalation on either side, investors, governments, and central banks worldwide are bracing for a volatile period ahead.
As IMF chief Georgieva noted, “Now is the time for restraint, cooperation, and a return to rules-based trade — not economic brinkmanship.”
