Fears of global recession rise as stock markets continue to fall after China responds to US president’s ‘bullying tactics’

Stock markets around the world plunged for a second day on Friday as China announced retaliatory tariffs of 34% on US imports, signalling a major escalation of a trade war ignited by Donald Trump and feeding fears of a global recession.

“For all imported goods originating from the US, an additional tariff of 34% on top of the current applicable tariff rate will be imposed,” Beijing’s finance ministry said.

China’s commerce ministry said that it would also impose more restrictions on the export of rare earths which are used in high-tech manufacturing such as batteries and electric vehicles. It added a further 16 US companies and organisations to its export control list, meaning that Chinese companies are restricted from doing business with them.

China had previously promised “resolute countermeasures” against Trump’s tariffs, which slapped a 10% rate on all imports coming to the US, with extra levies for certain countries, including China.

Wang Wen, the dean of Renmin University of China’s Chongyang Institute for Financial Studies, said: “China will never give in to Trump, but it does not exclude co-operation with the United States at the level of mutual respect and win-win co-operation. China knows that co-operation is not sought, but fought for.” Wang said that China’s response was “restrained” and limited to trade measures.

However other analysts said that China’s response was forceful.

Stephane Ekolo, a market and equity strategist for Tradition in London, told Reuters: “China comes out swinging with an aggressive response to Trump’s tariffs. This is significant and is unlikely to be over, hence the negative market reactions. Investors are afraid of a ‘tit for tat’ trade war situation.”

Around 60% of duty-free packages coming into the US come from China. But those deliveries will, from May, be subject to a fee of 30% of the value of the goods, or $25, rising to $50 in June.

China has also filed a lawsuit against the US with the World Trade Organisation.

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