China on Tuesday pledged to “fight to the end” in response to a new round of proposed U.S. tariffs, intensifying a trade war that has already erased trillions in global market value and raised fears of a looming recession.
The sharp escalation follows U.S. President Donald Trump’s announcement of potential 50 percent tariffs on Chinese goods — a significant increase from existing duties — and his refusal to ease off his aggressive trade stance despite mounting economic fallout.
In a swift response, Beijing unveiled a 34 percent retaliatory tariff on a broad range of U.S. imports, set to take effect Thursday. The move deepens a standoff between the world’s two largest economies, and has further rattled investor confidence worldwide.
Trump, speaking from the White House, warned of even harsher penalties if China continued to push back.
“I have great respect for China, but they cannot do this,” Trump said. “We’re going to have one shot at this… It’s an honour to do it.”
In Beijing, China’s commerce ministry condemned Washington’s tactics as “blackmail” and reiterated its readiness to counter any escalation.
“If the U.S. insists on going its own way, China will fight to the end,” a ministry spokesperson said. “We will take resolute countermeasures to protect our national interests.”
Despite the hardline tone, China left the door open for negotiations, stressing its preference for “dialogue” and warning that “there are no winners in a trade war.”
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Global Markets Rattled
The ongoing dispute has sent shockwaves through global markets. Hong Kong’s Hang Seng Index plunged 13.2% on Monday — its steepest one-day drop since the 1997 Asian financial crisis — though it recovered slightly in Tuesday trading.
Wall Street also ended in the red after a volatile session, with the Dow Jones and S&P 500 both closing lower. Southeast Asian markets, including Thailand, Indonesia, and Vietnam, opened sharply down Tuesday, while Singapore’s Prime Minister Lawrence Wong criticized the U.S. action in parliament.
“These are not the actions one takes against a friend,” Wong said.
In total, trillions of dollars have been wiped off global stock valuations in recent days.
Trump, however, doubled down on Monday, saying he had “no plans” to pause tariff hikes and cancelled any pending talks with China — while leaving the door open for negotiations with other countries.
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Currency Support and Domestic Reactions
As Chinese equities suffered, China’s central bank stepped in, reaffirming its support for state investment funds to buy exchange-traded funds (ETFs) and help stabilize the market.
Meanwhile, U.S. Treasury Secretary Scott Bessent signaled that Japan would receive “priority” status in tariff negotiations, praising Tokyo’s willingness to engage early. That reassurance helped lift stocks in Tokyo on Tuesday.
The latest round of tariffs includes a 10% baseline levy on most U.S. imports, which took effect Saturday. Additional duties hitting Chinese goods (34%) and European Union products (20%) are scheduled for Wednesday.
According to Bessent, many countries are in talks to reduce tariffs through “good-faith negotiations,” with several looking to avoid harsher penalties.
Meeting with Israeli Prime Minister Benjamin Netanyahu on Monday, Trump emphasized that while permanent tariffs are possible, negotiations could yield broader benefits.
“There can be permanent tariffs, and there can also be negotiations, because there are things we need beyond tariffs,” Trump said.
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European Response and Economic Concerns
In Luxembourg, EU trade ministers met to coordinate a unified response. France and Germany backed a digital services tax aimed at major U.S. tech companies.
“We must not rule out any tool — goods, services, taxation,” said French Trade Minister Laurent Saint-Martin. “The EU’s toolbox is comprehensive — and it can be aggressive.”
As inflation fears mount, U.S. leaders remain divided on the tariffs’ long-term impact. President Trump told Americans, “Don’t be weak! Don’t be stupid!”, insisting the measures would revive domestic manufacturing.
But economists, including JPMorgan Chase CEO Jamie Dimon, warned of rising prices and potential economic slowdown.
“Whether or not this causes a recession remains unclear,” Dimon said. “But it will certainly drag on growth.”
Even some of Trump’s allies, like Senator Ted Cruz, have expressed concern.
“This could lead to job losses and price hikes,” Cruz said, warning that a recession could become a political “bloodbath” for Republicans in next year’s midterm elections.