Global markets continued to fall on Wednesday as President Trump’s latest round of tariffs went into effect, including a significant 104% levy on Chinese goods. This development prompted concerns of a deepening global trade war, with Beijing warning it was ready to defend its economic interests. Stock markets in Europe opened Wednesday with sharp downturns.
Share prices fell again in early trading in London, Frankfurt, and Paris after recovering some of their value earlier this week. The French and German markets remained almost 12 percent lower than a week ago when the new tariffs were announced. Earlier, many markets across Asia had also slumped.
Japan’s Nikkei closed down nearly 4%, South Korea’s KOSPI fell 1.74%, and Taiwan’s composite index shed 5.79%. Hong Kong’s benchmark Hang Seng Index opened down more than 3% before recovering to close up about 1%. In mainland China, key indexes closed up more than 1% despite Chinese goods being the hardest hit by the tariffs.
The steep new levy was a response to Beijing’s issuance of reciprocal tariffs of 34% on American goods last week. The tariffs, which took effect after midnight on Wednesday, not only deepened a global trade conflict but also further unnerved investors who hoped they might prove to be a temporary negotiating tactic. China’s foreign ministry warned that it was ready to respond.
“We will not let anyone take away the Chinese peoples’ legitimate right to development,” foreign ministry spokesperson Lin Jian said on Wednesday. “We will continue to take resolute and strong measures to safeguard our legitimate rights and interests.”
Beijing has not yet announced a second round of retaliatory tariffs on U.S. goods.
Global markets tumble amidst trade war
Some investors had hoped that the U.S. would strike trade deals to lower the tariffs over time. President Trump has signaled he is willing to negotiate, posting Tuesday on Truth Social that China “wants to make a deal, badly.” However, analysts remain cautious. “China’s leadership doesn’t seem to be in any rush to make a deal,” Julian Evans-Pritchard, head of China economics at Capital Economics, said in a statement.
They appear to have concluded that they can afford to weather the impact of U.S. tariffs and that Trump will be in a weakened position further down the line as the economic and political fallout from the tariffs mounts.
With the largest foreign direct investment in the United States, Japan has negotiators scheduled to hold talks in Washington. These discussions could include foreign currency exchange rates, as Trump has accused Tokyo of devaluing the yen to support Japanese exports—claims Japan has repeatedly denied. Trade negotiators from South Korea, another close American trading partner, will also begin talks with the U.S. soon.
The government in Seoul has announced a series of emergency actions, including subsidies and tax breaks, to support the country’s export sectors, such as auto manufacturers. The deputy prime minister of Vietnam will meet with Treasury Secretary Scott Bessent to discuss the 46% tariffs placed on its exports to the U.S. The stock market in Vietnam fell almost 10 percent on Wednesday and has dropped nearly 20 percent over the past week. Meanwhile, India is engaging in discussions with the United States, and the two countries are working on a bilateral trade agreement expected to be concluded by the fall of this year.
Fears of a U.S. and broader global recession have been further heightened by the continued plunge of America’s largest stock market, the S&P 500. Its descent this past week has been steeper than at any moment in the past seven decades. Government bonds, traditionally considered safer than equities, have also plummeted.
President Trump has confused investors by describing the tariffs as “permanent” while also boasting that global leaders have requested trade negotiations, which might include offers to end their own pre-existing tariffs or non-trade barriers on U.S. goods. The U.S.-based investment bank JP Morgan has said its economists estimate there is now a 60% chance that the world could enter a recession by the end of 2025.
