China has rejected what it describes as “blackmail” from the United States, as the global trade conflict initiated by President Donald Trump‘s extensive tariffs shows little sign of easing, despite some stabilization in battered stock markets on Tuesday.
Beijing’s response followed Trump’s warning that he would increase tariffs on U.S. imports from China to over 100% on Wednesday, in retaliation for China’s decision to implement “reciprocal” duties announced by Trump the previous week.
China’s assertive stance stands in stark contrast to the more conciliatory approaches taken by other Asian nations. Meanwhile, the European Union continues to consult with its member states on how to respond effectively to Trump’s tariffs without inflicting further damage on its consumers and exporters.
“The U.S. threat to escalate tariffs against China is yet another mistake, revealing the American tendency to resort to blackmail,” stated China’s commerce ministry. “Should the U.S. persist in its demands, China will fight to the very end.”
In a phone conversation with China’s Premier Li Qiang, European Commission President Ursula von der Leyen urged Beijing to pursue a negotiated resolution and emphasized the importance of maintaining a fair trading system based on equal competition. They also discussed establishing a mechanism to monitor potential trade diversions resulting from the tariffs, as the EU is concerned that China may redirect low-cost exports from the U.S. to Europe.
Chinese manufacturers, ranging from those producing tableware to flooring, are expressing concerns about their profits and are hastily planning new overseas facilities in response to the tariff developments. In light of increasing external risks, Citi has revised its 2025 GDP growth forecast for China down to 4.2% from 4.7%.
The European Union has introduced its own counter-tariffs in response to President Trump’s aggressive trade policies, which have affected numerous countries, caused turmoil in financial markets, and raised concerns about a potential global recession.
‘UNRECOGNIZABLE’ US
As market fluctuations continued, the CEO of Euronext, the pan-European stock exchange operator, remarked that the United States is beginning to resemble an emerging market. “There is widespread fear,” Stephane Boujnah stated during an interview with France Inter radio, describing the U.S. as “unrecognizable.” He noted a sense of loss, as the U.S., once seen as a dominant nation aligned with European values and institutions, now appears more like an emerging market. Emerging economies frequently implement targeted tariffs to shield specific industries from international competition.
On Tuesday, stock markets showed signs of recovery after a tumultuous period for investors, prompting some business leaders, including those close to Trump, to encourage the president to reconsider his approach. European stocks rebounded from 14-month lows in early trading following four consecutive days of significant declines, while global oil prices also recovered after a sharp drop. U.S. stock index futures rose slightly after experiencing trillions of dollars in losses since the previous week, as investors eagerly awaited any indication of the U.S. engaging in negotiations. Japan’s Nikkei index surged 6% on Tuesday, and Chinese blue-chip stocks increased by 1%, recovering some of the over 7% decline from Monday. Conversely, Indonesian markets faced a severe downturn, with stocks plummeting 9% as trading resumed after a lengthy holiday. The central bank of Indonesia has committed to intervening, joining other global authorities in efforts to mitigate the recent market turmoil.
Trump stated that the tariffs, starting at a minimum of 10% on all U.S. imports and potentially reaching as high as 50% for specific items, are intended to help the United States restore its industrial sector, which he claims has diminished over years of trade liberalization.
EUROPE CONSIDERS RETALIATORY MEASURES
In response, the European Commission has suggested implementing counter-tariffs of 25% on various U.S. products, such as soybeans, nuts, and sausages. However, items like bourbon whiskey were notably excluded from this proposal, according to a document reviewed by Reuters.
Officials indicated their willingness to engage in negotiations for a “zero for zero” agreement with Trump’s administration.
The 27-member European Union is already grappling with existing tariffs on automobiles and metals, and is set to face a 20% tariff on additional products starting Wednesday. Trump has also warned of potential tariffs on EU alcoholic beverages.
In light of the high U.S. tariffs, Vietnam, a low-cost manufacturing center, has requested a 45-day extension and pledged to increase its purchases of American goods to help balance trade.
Amid a significant decline in its rupiah currency, Indonesia has announced concessions for U.S. imports, including tax reductions on electronics and steel, in an effort to gain favor with the White House.
The largest economy in Southeast Asia plans to send a delegation to Washington next week to negotiate a deal aimed at mitigating the effects of a 32% tariff set to take effect on Wednesday. Meanwhile, South Korea is exploring options to boost imports from the United States as it prepares for its own discussions with Washington.
According to Politico, U.S. Treasury Secretary Scott Bessent met with President Trump in Florida on Sunday to encourage him to focus on securing trade agreements, which would help reassure markets about the long-term goals of his strategy. Additionally, Elon Musk, who is leading Trump’s initiative to reduce government spending, has advocated for eliminating tariffs between the U.S. and Europe and has reportedly urged Trump directly to reconsider the tariffs.
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