China has issued a firm warning that it will not back down in the face of escalating trade tensions with the United States, vowing to “fight to the end” against sweeping new tariffs imposed by former U.S. President Donald Trump. In a strongly worded policy statement published on Wednesday, the Chinese Ministry of Commerce accused Washington of breaking past trade promises and warned of severe consequences for both economies.

The statement came as Trump’s 104% tariffs on Chinese goods officially came into effect, targeting a wide array of exports and deepening a growing economic rift between the world’s two largest economies. The Chinese government responded by reiterating its commitment to retaliate with a robust package of countermeasures, including 34% tariffs on all U.S. imports, restrictions on rare earth mineral exports, and other targeted economic actions.

“If the U.S. insists on further escalating its economic and trade restrictions, China has the firm will and abundant means to take necessary countermeasures and fight to the end,” the Ministry of Commerce said in the white paper released Wednesday morning.

Unlike other nations currently negotiating exemptions or modifications to Trump’s tariff regime, China has thus far declined to engage in formal talks. Ministry of Foreign Affairs spokesman Lin Jian stated that dialogue was only possible under conditions of “equality, respect, and mutual benefit.”

Tensions have been further exacerbated by the U.S. move to potentially ban TikTok unless it is sold to an American buyer — a move Beijing claims violates previous agreements made in the Phase 1 trade deal signed during Trump’s first term. That agreement included provisions to avoid pressuring companies into forced technology transfers. China now says the proposed TikTok ban breaches those commitments.

While ByteDance, TikTok’s parent company, has attempted to reopen discussions, China has reportedly blocked progress on the deal until broader trade and tariff issues are addressed.

In an effort to counter U.S. claims of trade imbalance, China’s policy paper argues that overall economic exchange — when including services and the operations of U.S. companies within China — is effectively balanced. In 2023, China recorded a $26.57 billion trade in services deficit with the U.S., covering industries such as insurance, banking, and accounting.

The ministry also dismissed the logic behind Trump’s tariff strategy, warning of broader economic consequences for the U.S. itself. “History and facts have proven that the United States’ increase in tariffs will not solve its own problems,” the statement read. “Instead, it will trigger sharp fluctuations in financial markets, increase inflation, weaken industrial competitiveness, and raise the risk of recession — ultimately backfiring on itself.”

The standoff shows no signs of resolution, and with both sides escalating rather than easing tensions, global markets are bracing for further fallout in the weeks ahead.

Global trade tensions escalated sharply this week after former U.S. President Donald Trump threatened to impose an additional 50% tariff on all Chinese imports. In a strong response, China vowed to “fight to the end” while taking urgent steps to stabilise its stock markets following a significant downturn.

The dispute reignited after Trump’s announcement last Wednesday of a 34% tariff hike on Chinese goods, which Beijing countered with matching tariffs on American products. In a further escalation on Monday, Trump warned that if China did not retract its retaliatory measures by April 8, the U.S. would impose an additional 50% tariff, effective April 9. If implemented, cumulative tariffs on Chinese goods would reach 124%.

“If China does not withdraw its 34% increase above their already long-term trading abuses by tomorrow, April 8th, the United States will impose ADDITIONAL Tariffs on China of 50%,” Trump posted on social media.

In response, China’s Ministry of Commerce condemned the move, calling it “a mistake on top of a mistake,” and reaffirmed the country’s readiness to respond forcefully. “If the U.S. insists on its own way, China will fight to the end,” the ministry stated, urging Washington to return to negotiations based on mutual respect.

Trump, meanwhile, indicated no willingness to pause the tariffs. During a press conference, he also rejected the European Union’s proposal of zero tariffs on cars and industrial goods, maintaining that the EU would need to buy energy from the U.S. “We can knock off $350 billion in one week,” he claimed.

As trade tensions mounted, global markets initially took a hit, but rebounded strongly on Tuesday, buoyed by dip-buying and renewed hopes for negotiations.

Japan’s Nikkei 225 surged over 6% after hitting an 18-month low the previous day. Japan is expected to hold trade discussions with U.S. Trade Representative Jamieson Greer on Wednesday, following a call between Prime Minister Shigeru Ishiba and Trump.

In China, the Hang Seng Index climbed as much as 3.7% before trimming gains, aided by state-backed fund intervention. Investors also anticipate further economic stimulus from Beijing, with five-year interest rate swaps dropping to their lowest since 2020, suggesting imminent monetary easing. The People’s Bank of China also set the yuan at its weakest level since September 2023 to boost exports.

Other Asian markets followed suit. Australia’s ASX 200 rose 1.9%, led by mining stocks, while South Korea’s Kospi posted modest gains. U.S. futures rose over 1% across the S&P 500, Dow Jones, and Nasdaq, sparking optimism in European markets as well.

Still, analysts remain cautious. “I wouldn’t exactly be betting the house on a durable bounce, unless and until we get a decisive policy pivot,” said Michael Brown, a senior strategist at Pepperstone.

As the U.S.-China trade standoff intensifies, global markets and investors brace for more volatility in the days ahead.

European markets plunged on Monday in their worst single-day decline since the onset of the COVID-19 pandemic, as mounting global trade tensions and inflation concerns sent investors fleeing from riskier assets.

Triggered by U.S. President Donald Trump’s sweeping new tariffs and the lack of immediate support from central banks, equities across the continent tumbled sharply, reflecting the global market rout that began late last week. The Euro STOXX 50 dropped 6% by mid-morning, bringing its losses over the past three sessions to 14%. The broader STOXX 600 fell 5.7%, while Germany’s DAX sank 7.2%—its most severe drop since March 2020. Italy’s FTSE MIB and Spain’s IBEX 35 also posted heavy losses of 6.5% and 6%, respectively.

The downturn followed an equally dramatic session in Asia, where Hong Kong’s Hang Seng Index collapsed 13%, marking its worst one-day performance since 1997. Japan’s Nikkei 225 tumbled 8.6%, while Shanghai’s Composite Index lost 7%. U.S. stock futures also pointed to further declines, with S&P 500 futures down 3.8%, Nasdaq 100 futures off 4.2%, and Dow Jones futures slipping 3.3%.

President Trump’s newly imposed 34% tariff on Chinese imports, along with an additional 20% duty on goods from the European Union, has sparked fears of a deepening global trade war. On his platform, Truth Social, Trump defended the move as necessary to address “massive financial deficits,” calling tariff revenues “a beautiful thing to behold.”

European leaders quickly voiced their intent to retaliate. “We have the necessary tools to respond,” said Spain’s Economy Minister Carlos Cuerpo, signaling coordinated action across the EU.

Adding to investor unease, U.S. Federal Reserve Chair Jerome Powell warned on Friday that the economic fallout from the tariffs could be “significantly larger than expected,” stoking inflation while dampening growth. Powell said the Fed is in no rush to cut interest rates, further eroding market confidence.

Financial stocks bore the brunt of Monday’s sell-off. Major European banks like Banco Sabadell (-10%), Raiffeisen (-9.2%), ING (-8.6%), and Commerzbank (-7.6%) were among the hardest hit. The industrials sector also suffered heavy losses, with Rheinmetall AG down 15.3%, Safran down 10%, and major players like Airbus, Siemens Energy, and Thyssenkrupp all falling between 8% and 9.5%.

Luxury and consumer brands exposed to global trade disruptions also declined, including Kering (-9.9%), Richemont (-8.2%), and LVMH (-7.5%).

Meanwhile, safe-haven assets surged. The Swiss franc gained over 1% against the dollar, and German Bund yields dropped 7 basis points. Gold prices dipped 0.5% on profit-taking, while oil prices extended their sharp decline, down 3.6% on the day and 17% over three sessions—mirroring the chaos of March 2020.

With no signs of immediate intervention from central banks and retaliation brewing in Europe and Asia, markets are bracing for sustained volatility amid worsening economic uncertainty.