World bracing for market turmoil after US confirms it will proceed with 104% tariffs against China

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Global markets are bracing for a trade war between the world’s two largest economies, as the White House confirmed Donald Trump’s 104 per cent tariffs on China are set to take effect.

Stock indexes in Europe and Asia finally returned to green on Tuesday, after nearly a week of turmoil – sparked by Mr Trump’s so-called “Liberation Day” tariffs announcement – wiped close to $10 trillion (£7.8 trillion) off the value of global markets.

But Wall Street continued its downward trend as Washington and Beijing traded increasingly stormy rhetoric, and the White House confirmed that tariffs of 104 per cent would start to be collected on Chinese goods from midnight in Washington DC (5am BST) on Wednesday.

That levy amounts to a near-doubling of the 54 per cent tariffs Mr Trump had initially planned to impose on China – with the US president adding a further 50 per cent on Monday after Beijing vowed to retaliate with a levy of 34 per cent on US goods.

Confirming the tariffs, White House spokesperson Karoline Leavitt told reporters: “It was a mistake for China to retaliate. When America is punched he punches back harder.”

White House press secretary Karoline Leavitt discusses the Trump administration’s tariffs and trade policies during the daily briefing in the Brady Briefing Room (AFP via Getty Images)

Further doubling down, Mr Trump claimed on his Truth Social website that China “wants to make a deal, badly, but they don’t know how to get it started”, adding: “We are waiting for their call. It will happen!”

Accusing Washington of “typical unilateralism and protectionist economic bullying”, Beijing warned on Tuesday: “If the US insists on having its way, China will fight to the end.”

“Intimidation, threats and blackmail are not the right way to engage with China,” said foreign ministry spokesperson Lin Jian, as he vowed that “China will take necessary measures to firmly safeguard its legitimate and lawful rights and interests”.

It is not yet clear what countermeasures Beijing is planning to impose. However, the BBC cited state media in reporting that the US agricultural sector could be impacted – including a potential total ban on poultry – with other reports suggesting a ban on all US films is under consideration.

China’s benchmark stock index rebounded in early trade on Tuesday, clawing back some of the 7 per cent loss suffered on Monday – as Beijing let the yuan fall to its weakest level in over 18 months in an attempt to counteract the blow to Chinese exports.

In a phone call with Chinese premier Li Qiang, European Commission president Ursula von der Leyen urged Beijing to ensure a negotiated solution to the problems caused by Mr Trump’s tariffs.

Donald Trump has insisted China ‘wants to make a deal, badly’ (Kevin Dietsch/Getty Images)

Both politicians discussed setting up a mechanism to track possible trade diversion caused by the tariffs, Ms von der Leyen’s office said, as the EU fears China will redirect cheap exports from the US to Europe.

The European Union has also proposed 25 per cent counter-tariffs of its own, according to reports, after Mr Trump’s levies intensified fears over a global recession and upended a trading world order that has been effective for decades.

But with Wall Street’s S&P 500 index approaching bear market territory alongside the Nasdaq on Tuesday, the White House appeared to soften its rhetoric towards possible negotiations over the global tariffs imposed by Mr Trump.

“Bring us your best offers and he will listen,” Ms Leavitt, the White House press secretary, said of other countries potentially negotiating tariff rates with Trump, adding that Israeli prime minister Benjamin Netanyahu’s visit to Washington to talk trade this week “should serve as a model”.

Insisting, however, that this was not a softening of Washington’s stance, Ms Leavitt said Mr Trump has directed his team to work with countries that have reached out to strike deals and to create “tailor-made” trade deals for each country, adding: “They are not going to be off-the-rack deals.”

Additional reporting by Reuters