Beijing retaliates, global stocks sink, and fears of recession mount as trade tensions escalate
Global stock markets plunged on Monday amid escalating trade tensions between the United States and China, as President Donald Trump urged calm and defended his administration’s sweeping tariffs.
In a dramatic day of losses, New York’s three major indices opened with declines of over 3%, while Asian and European markets also saw significant sell-offs. Hong Kong’s Hang Seng index suffered its worst drop since the 1997 Asian financial crisis, plummeting 13.2%, while Tokyo’s Nikkei 225 fell 7.8%.
“The market’s telling you in plain language: global demand is vanishing, and a global recession is on the cards and coming on fast,” said Stephen Innes of SPI Asset Management.
The turmoil follows Trump’s implementation of a 10% “baseline” tariff on global imports on Saturday, with steeper duties — including a 34% levy on Chinese goods and 20% on EU products — set to take effect Wednesday. Beijing has announced a matching 34% tariff on U.S. goods, effective Thursday.
Undeterred, Trump took to social media just before markets opened to urge strength and patience.
“Don’t be Weak! Don’t be Stupid! Be Strong, Courageous, and Patient, and GREATNESS will be the result,” he posted.
He defended the move as a long-overdue correction to global trade imbalances, calling China “the biggest abuser of them all.”
In response, Chinese Vice Commerce Minister Ling Ji accused the U.S. of provoking the dispute, stating the retaliatory tariffs were meant to return Washington to a “multilateral trade system.”
Meanwhile, EU trade ministers convened in Luxembourg to craft a coordinated response. France and Germany pushed for tough action, including targeting U.S. tech giants and deploying a new anti-coercion mechanism.
“We must not exclude any option,” warned French Trade Minister Laurent Saint-Martin.
However, Ireland voiced caution, with Trade Minister Simon Harris warning that taxing services would be “an extraordinary escalation.”
As fears of a global economic slowdown intensified, JPMorgan Chase CEO Jamie Dimon warned in a letter to shareholders that the tariffs could stoke inflation and slow growth.
“Whether or not the menu of tariffs causes a recession remains in question, but it will slow down growth,” Dimon stated.
Monday’s rout erased trillions from global markets. The Stoxx Europe 600 index slumped 5%, wiping out over €1.5 trillion in value in a matter of days. Taipei’s exchange also logged a record-breaking 9.7% plunge.
U.S. crude oil dipped below $60 a barrel for the first time since April 2021, further signaling economic concerns.
Despite the fallout, Trump remained defiant, telling reporters aboard Air Force One, “Sometimes you have to take medicine to fix something.”
More than 50 countries have reportedly reached out to Washington seeking dialogue, including allies like Japan and Israel. Vietnamese officials have requested a 45-day delay to the newly imposed 46% tariffs on their exports.
As markets continue to reel and global leaders scramble for solutions, the world watches closely — with fears mounting that the trade war could spiral into a full-blown economic crisis.
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