UK and EU stock markets slump as Trump’s tariffs, including 104% on China, take effect – business live

latest full report here.

• Trump’s new wave of tariffs on dozens of economies came in force on Wednesday, including 104% levies against Chinese goods, as Washington and Beijing were locked in a high-stakes game of brinkmanship.

• Rates on imports to the US from exporters like the European Union or Japan rose further at 12.01am (05.01am BST) Wednesday, after the imposition of sweeping 10% tariffs rocked the global economy since coming into force over the weekend.

• China has been hardest hit by the tariffs but has shown no signs of backing down, vowing to fight a trade war “to the end” and promising countermeasures to defend its interests. China’s retaliatory tariffs of 34% on US goods are due to enter in force on Thursday.

• Trump said on Tuesday his government was working on “tailored deals” with trading partners, with the White House saying it would prioritise allies like Japan and South Korea. His top trade official Jamieson Greer also told the Senate that Argentina, Vietnam and Israel were among those who had offered to reduce their tariffs.

• Trump told a dinner with fellow Republicans on Tuesday night that countries were “dying” to make a deal. The US president said: “I’m telling you, these countries are calling us up kissing my ass.”

• A sell-off across Asian markets resumed on Wednesday, with Japan’s Nikkei down more than 3%, Hong Kong plunging more than 3%, South Korea’s currency hitting a 16-year low and government bonds suffering heavy losses. Australian shares lost billions of dollars of value, while Taiwain stocks fell 5.8% in afternoon trading. Trillions in equity have been wiped off global bourses in the past days.

• Foreign exchange markets also witnessed ructions, with the South Korean won falling to its lowest level against the dollar since 2009 this week. China’s offshore yuan also fell to an all-time low against the US dollar, as Beijing’s central bank moved to weaken the yuan on Wednesday for what Bloomberg said was the fifth day in a row. Oil prices slumped, with the West Texas Intermediate closing below $60 for the first time since April 2021.

• India’s central bank cut interest rates, citing “challenging” global conditions.

• The European Union has sought to cool tensions, with bloc chief Ursula von der Leyen warning against worsening the trade conflict in a call with Chinese premier Li Qiang. She stressed stability for the world’s economy, alongside “the need to avoid further escalation”, an EU readout said.
  With news agencies

a white paper published on Wednesday on the country’s trade relationship with the US.

“The move will not help to solve domestic economic problems in the US, but will ultimately backfire and make the US a victim of its own misdeeds,” the white paper said. It called for mutual respect, saying:

As two major countries with different development stages and economic systems, it is normal for China and the United States to have differences and frictions in economic and trade cooperation.

The success of China and the United States is an opportunity rather than a threat to each other.

But the lengthy document then launched into pages and pages of criticisms. It accused the US of abusing trade levers to suppress China, and of failing to meet obligations under numerous agreements including the phase one trade deal signed during Trump’s first term, and of “systematically escalated economic and other forms of pressure against China”. It cited long held complaints over US criticism and sanctions of China’s human rights abuses in Xinjiang and the crackdown on Hong Kong’s pro-democracy movement, and repeated accusations that the US was using fentanyl as a pretext to launch its trade war on China.

The white paper made it clear that China is unlikely to back down in this trade war, and made reference to the last known communication between Trump and China’s leader Xi Jinping.

Trade wars produce no winners, and protectionism leads up a blind alley. The economic success of both China and the US presents shared opportunities rather than mutual threats. The US side is expected to join forces with the Chinese side to pull in the same direction pointed out by the two heads of state in their phone conversation earlier this year.

alongside US government debt, as investors question whether the world’s biggest economy will fall into recession.

The dollar is down by 0.7% against a trade-weighted basket of currencies on Wednesday. The euro jumped by 0.75% to $1.1041. Sterling gained 0.3% against the dollar, with one pound buying $1.2812.

The Japanese yen also strengthened by 0.6% against the dollar, with a dollar buying 145.48 yen.

Lee Hardman, a senior currency analyst at MUFG, a Japanese investment bank, said:

The unfavourable price action has cast some doubt on the safe haven status of the US government bond market and the US dollar at the time when the global trade war is intensifying.

We expect foreign exchange market volatility to remain elevated in the near-term, and continue to expect the traditional safe haven currencies of the yen and Swiss franc to outperform.

Donald Trump on US imports from China is at the centre of the turmoil on global financial markets.

Trump appears to believe that China, led by Xi Jinping, will back down and offer some kind of deal. However, that may be unlikely, writes the Guardian’s senior China correspondent, Amy Hawkins:

The opening shots seem like a distant memory. Back in January, US president Donald Trump threatened to impose a tariff of 10% on Chinese imports. Less than three months later, the rate is now 104%.

China has condemned the tariffs. As well as applying its own reciprocal tariff of 34% on US imports, Beijing has been fighting a war of words.

“When challenged, we will never back down,” said China’s foreign ministry spokesperson, Lin Jian. The commerce ministry said: “China will fight to the end if the US side is bent on going down the wrong path.” Further countermeasures have been promised by Beijing.

You can read the full analysis here:

Donald Trump last night said that “major” tariffs on imported medicines were coming.

Anglo-Swedish AstraZeneca fell by 4.4% in early trading, while GSK, formerly known as GlaxoSmithKline, dropped by 3.3%.

“We’re going to be announcing very shortly a major tariff on pharmaceuticals,” Trump said at a dinner of the National Republican Congressional Committee.

latest full report here.

• Trump’s new wave of tariffs on dozens of economies came in force on Wednesday, including 104% levies against Chinese goods, as Washington and Beijing were locked in a high-stakes game of brinkmanship.

• Rates on imports to the US from exporters like the European Union or Japan rose further at 12.01am (05.01am BST) Wednesday, after the imposition of sweeping 10% tariffs rocked the global economy since coming into force over the weekend.

• China has been hardest hit by the tariffs but has shown no signs of backing down, vowing to fight a trade war “to the end” and promising countermeasures to defend its interests. China’s retaliatory tariffs of 34% on US goods are due to enter in force on Thursday.

• Trump said on Tuesday his government was working on “tailored deals” with trading partners, with the White House saying it would prioritise allies like Japan and South Korea. His top trade official Jamieson Greer also told the Senate that Argentina, Vietnam and Israel were among those who had offered to reduce their tariffs.

• Trump told a dinner with fellow Republicans on Tuesday night that countries were “dying” to make a deal. The US president said: “I’m telling you, these countries are calling us up kissing my ass.”

• A sell-off across Asian markets resumed on Wednesday, with Japan’s Nikkei down more than 3%, Hong Kong plunging more than 3%, South Korea’s currency hitting a 16-year low and government bonds suffering heavy losses. Australian shares lost billions of dollars of value, while Taiwain stocks fell 5.8% in afternoon trading. Trillions in equity have been wiped off global bourses in the past days.

• Foreign exchange markets also witnessed ructions, with the South Korean won falling to its lowest level against the dollar since 2009 this week. China’s offshore yuan also fell to an all-time low against the US dollar, as Beijing’s central bank moved to weaken the yuan on Wednesday for what Bloomberg said was the fifth day in a row. Oil prices slumped, with the West Texas Intermediate closing below $60 for the first time since April 2021.

• India’s central bank cut interest rates, citing “challenging” global conditions.

• The European Union has sought to cool tensions, with bloc chief Ursula von der Leyen warning against worsening the trade conflict in a call with Chinese premier Li Qiang. She stressed stability for the world’s economy, alongside “the need to avoid further escalation”, an EU readout said.
  With news agencies

Trump tariffs, the finance minister said.

“A possible trade conflict increases the risk of recession, there is no question about that,” Joerg Kuki told the broadcaster Deutschlandfunk on Wednesday.

Already smarting from two consecutive years of recession, a third contraction in 2025 would mark a historically long down-run for Europe’s largest economy.

Reuters quoted sources as saying German economic institutes are to revise down their forecast for 2025 to just 0.1% growth, under projections that do not factor in the latest Trump tariffs.

a tariff of 10% on Chinese imports. Less than three months later, the rate is now 104%.

China has condemned the tariffs. As well as applying its own reciprocal tariff of 34% on US imports, Beijing has been fighting a war of words.

“When challenged, we will never back down,” China’s foreign ministry said. The commerce ministry said: “China will fight to the end if the US side is bent on going down the wrong path.” Further countermeasures have been promised by Beijing.

The tit-for-tat measures could spark fears of a race to the bottom, with ordinary people suffering as prices rise and a fears of a global recession grow. But although China’s economy has in recent years been beset by its own challenges, when it comes to tariffs specifically, Beijing is unlikely to blink first.

For the full analysis on the high-stakes game of brinkmanship between China and the US, see here:

imposed its own tariffs on the US.

Kao said:

Without urgent and collective action to accelerate intra-Asean economic integration and diversify our markets and partnerships, we risk ceding our place in a fractured and fast-evolving global economy.

Source: theguardian.com