China slapped an 84% tariff on US imports on Wednesday, escalating the trade war between the two largest economies in the world. This move came after US President Donald Trump’s 104% tariffs on Chinese goods took effect earlier in the day.
China’s response was swift. It pledged to take “resolute and effective measures” to protect its interests, making it clear that it would not back down.
The news sent shockwaves through global markets. US stock futures tumbled, with the Dow dropping 400 points, or 1%. The S&P 500 fell 0.7%, and Nasdaq futures dipped 0.3%. The S&P 500 is dangerously close to entering bear market territory, having dropped nearly 20% from its peak just seven weeks ago.
Investors are nervous, fearing that the escalating tariffs will drag both the global and US economies into a recession.
In Asia, Japan’s Nikkei index closed 4% lower, while Hong Kong’s Hang Seng saw a small gain. However, earlier in the week, the Hang Seng had suffered a massive 13% drop, its worst since the 1997 Asian financial crisis.
South Korea’s Kospi index entered bear market territory after a 20% decline from its recent high. The country’s government announced $1.3 billion in emergency support for its auto industry, aiming to lessen the impact of Trump’s tariffs. The index ended the day down 1.7%.
Markets in Taiwan also saw sharp declines, though Shanghai’s stock market stood out with a 1% gain, bucking the overall downward trend.
In Europe, the markets were in the red. The STOXX 600 index was down 3%, while France’s CAC dropped 2.6%, Germany’s DAX fell 2.8%, and London’s FTSE 100 lost 2.4%.
Global markets are feeling the heat as the trade war deepens, and the economic outlook grows increasingly uncertain.
