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China said Tuesday it would “fight to the end” and take countermeasures against the United States to safeguard its own interests after President Donald Trump threatened an additional 50% tariff on Chinese imports.
The Commerce Ministry said the U.S.‘s imposition of “so-called ‘reciprocal tariffs’” on China is “completely groundless and is a typical unilateral bullying practice.”
China, the world’s second-largest economy, has taken retaliatory tariffs, and the ministry hinted in its latest statement that more may be coming.
“The countermeasures China has taken are aimed at safeguarding its sovereignty, security, and development interests, and maintaining the normal international trade order. They are completely legitimate,” the ministry said.
“The U.S. threat to escalate tariffs on China is a mistake on top of a mistake and once again exposes the blackmailing nature of the US. China will never accept this. If the US insists on its own way, China will fight to the end,” it added.
Trump’s threat Monday of additional tariffs on China raised fresh concerns that his drive to rebalance the global economy could intensify a financially destructive trade war. Stock markets from Tokyo to New York have become more unstable as the tariff war worsens.
Trump’s threat came after China said it would retaliate against the U.S. tariffs he announced last week.
“If China does not withdraw its 34% increase above their already long-term trading abuses by tomorrow, April 8th, 2025, the United States will impose ADDITIONAL Tariffs on China of 50%, effective April 9th,” Trump wrote on Truth Social. “Additionally, all talks with China concerning their requested meetings with us will be terminated!”
If Trump implements his new tariffs on Chinese products, U.S. tariffs on Chinese goods would reach a combined 104%. The new taxes would be on top of the 20% tariffs announced as punishment for fentanyl trafficking and his separate 34% tariffs announced last week. Not only could that increase prices for American consumers, it could also give China an incentive to flood other countries with cheaper goods and seek deeper relationships with other trading partners, particularly the European Union.
Trump frequently bragged about stock market gains during his first term, and the threat of losses on Wall Street was viewed as a potential guardrail on risky economic policies in his second term. But that hasn’t been the case, and Trump has described days of financial pain as necessary.
“I don’t mind going through it because I see a beautiful picture at the end,” he said.
Trump officials have frequently appeared on television to make the case for his policies, but none of their explanations has calmed the markets. The only improvement came from a false report that top economic adviser Kevin Hassett said Trump was considering a pause on all tariffs except for China. Stock prices spiked before the White House denied it was true by calling the post “fake news.”
China is one of the U.S.'s top trading partners, especially for consumer goods, and the tariffs — essentially a tax on imports paid by U.S. companies — will eventually be passed on to the consumer.
European Commission President Ursula von der Leyen said the European Union would focus on trade with other countries besides the United States, saying there are “vast opportunities” elsewhere.
U.S. total goods trade with China were an estimated $582 billion in 2024, making it the top trader in goods with the U.S. The 2024 deficit with China in goods and services trade was between $263 billion and $295 billion.
In Hong Kong, where stocks were slightly higher Tuesday, Chief Executive John Lee blasted the latest U.S. tariffs as “bullying,” saying the “ruthless behavior” has damaged global and multilateral trade and brought great risks and uncertainties to the world.
Lee said the city would link its economy closer to China’s development, sign more free trade agreements, attract more foreign companies and capital to Hong Kong, and support local enterprises in coping with the impact of the tariffs.
Volatility engulfed the stock market on Monday after an erroneous report about a pause in tariffs triggered wild swings in the major U.S. indexes, adding $2.4 trillion in value before erasing it within an hour. The S&P 500 gyrated between large gains and steep declines, briefly entering bear market territory, before clawing back losses. The Dow Jones Industrial Average recorded its largest ever high-to-low swing in points, per CNBC. The Nasdaq also whipsawed, as shares of Apple — the largest U.S. company by market value — fell almost 4% after President Trump threatened additional 50% tariffs on China.
- The numbers: Dow Jones: -0.9%; S&P 500: -0.2%; Nasdaq: +0.1%.
- Elsewhere in financial markets on Monday, Treasury yields rose, oil prices slumped, and bitcoin fell.
- U.S. stock market valuations have now sunk to their lowest since late 2023, according to data compiled by Bloomberg, as Wall Street analysts slash forecasts for the major indexes.
The Dow Jones ended lower on Monday as investors reacted to ongoing concerns about Donald Trump's extensive tariff plans. The stock market experienced extreme fluctuations, triggered by a false report suggesting the president was considering delaying his tariffs. The Dow's movement on Monday was particularly volatile, with a 2,000-point difference between its highest and lowest points, leading to a $2.4 trillion loss and gain in just minutes. This wild market swing followed claims that National Economic Council Director Kevin Hassett had mentioned a 90-day tariff pause for countries other than China. However, there was no confirmation of Hassett's statement, and White House Press Secretary Karoline Leavitt dismissed the reports as "fake news."
By the end of the day, the Dow dropped by 349 points, and the S&P 500 lost 11 points, while the NASDAQ saw a slight gain of 15 points. Trump later denied the reports, stating that he was not considering a pause on the tariffs. CNBC clarified the misinformation, explaining that the unverified claim had aired in real-time and was quickly corrected.
The confusion stemmed from an interview where Hassett was asked about a potential 90-day tariff freeze. He did not confirm the pause, instead suggesting that Trump would decide on the matter and advising Bill Ackman, who proposed the idea, to "ease off the rhetoric."
The market’s volatile Monday came after a tough week, with the Dow losing 2,231 points and the S&P 500 falling 6% on Friday, marking the worst week for the stock market since 2020. Trump's tariff announcement, imposing at least a 10% tariff on all countries except Russia, contributed to this steep decline. JPMorgan’s Chief Economist, Bruce Kasman, now forecasts a 60% chance of a global recession in 2025, up from 40%.
Despite the losses, Trump defended his tariff strategy, pointing to lower oil prices, reduced interest rates, and a decrease in food prices. He emphasized that the U.S. was benefiting financially from the tariffs and expressed confidence in his approach, urging Americans to remain strong and patient.
President Donald Trump says his tariffs will bring factory jobs back to the United States, but economists on both sides of the political aisle are skeptical.
Jared Bernstein, chair of the White House Council of Economic Advisers under former President Joe Biden, called Trump’s reindustrialization promise a “myth” during an interview with NewsNation’s Elizabeth Vargas on Monday.
“If investors are sitting on their hands because of the uncertainty that this tariff agenda has generated, they’re not going to invest in that new warehouse or that new factory,” Bernstein said.
Bernstein pointed out that even a country like Germany, known for its large trade surplus, has experienced a decline in the share of manufacturing jobs over the past decade.
“The [Trump] administration is telling us pain now and gain later,” Bernstein said. “I’m afraid that it’s pain now, more pain later.”
Stephen Moore, a Trump economic adviser in his first term, said the president is right that many countries charge higher tariffs on U.S. goods than the U.S. does on theirs, but he isn’t convinced a trade war will lead to a surge of domestic manufacturing jobs.
“The other countries haven’t always played by the rules, but it’s just a truism that ten years from now almost all factory jobs will be done by robots,” Moore told Vargas.
Instead, Moore thinks the administration should make sure the U.S. retains its leadership in higher skill jobs like financial services, AI and technology.
So, what will end the economic turmoil? Moore said it’s up to other countries to negotiate better terms.
“They’ve got to get on that phone and call Donald Trump and say let’s make a deal,” he said.
Jamie Dimon, CEO of America’s biggest bank, warned that President Trump's tariffs will raise prices not only on imported goods but also on those made in the U.S. The JPMorgan chief added in his annual shareholder letter that the economy had already begun weakening before the announcement last week. The remarks come as investors raise bets that the Federal Reserve could deliver an emergency interest-rate cut as early as next week to prop up the economy.
- Larry Fink, CEO of the world's biggest asset manager, BlackRock, said that many chief executives believe the U.S. economy is already in a recession amid the new tariffs.
- Bill Ackman, founder of Pershing Square, said in a post that the new trade regime was "a mistake" and called for a 90-day pause on its implementation. Another prominent investor, Stanley Druckenmiller, also criticized the policies.
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Wall Street could soon be in the claws of another bear market as the Trump administration’s tariff blitz fuels fears that the added taxes on imported goods worldwide will sink the global economy.
The last bear market happened in 2022, but this decline feels more like the sudden, turbulent bear market of 2020, when the benchmark S&P 500 index tumbled 34% in one month, the shortest bear market ever.
Here are some common questions about bear markets:
Why is it called a bear market?
A bear market is a term used by Wall Street when an index such as the S&P 500 or the Dow Jones Industrial Average has fallen 20% or more from a recent high for a sustained period.
Why use a bear to refer to a market slump? Bears hibernate, so they represent a stock market that’s retreating. In contrast, Wall Street’s nickname for a surging market is a bull market, because bulls charge.
The S&P 500, Wall Street’s main barometer of health, closed 0.2% lower Monday after having been down by as much as 4.7%. It’s now 17.6% below the all-time high it set on Feb. 19.
The Dow industrials fell 0.9%, and the tech-heavy Nasdaq composite, which already was in a bear market, bounced back from an early slide to eke out a 0.1% gain.
The most recent bear market for the S&P 500 ran from Jan. 3 to Oct. 12 in 2022.
What’s bothering investors?
The trade war has ratcheted up fear and uncertainty on Wall Street over how businesses and consumers will respond.
President Donald Trump followed through on tariff threats last week by declaring a 10% baseline tax on imports from all countries and higher tariff rates on dozens of nations that run trade surpluses with the United States.
Global markets cratered the next day, and the sell-off deepened after China announced it would retaliate with tariffs equal to the ones from the U.S.
Tariffs cause economic pain in part because they’re a tax paid by importers that often gets passed along to consumers, adding to inflationary pressure. They also provoke trading partners into retaliating, which can hurt all economies involved.
Import taxes can also cause economic damage by complicating the decisions businesses have to make, including which suppliers to use, where to locate factories, and what prices to charge. And that uncertainty can cause them to delay or cancel investments that help drive economic growth.
The tariffs come at a time when the U.S. economy is already showing signs of slowing. Markets are also worried that tariffs could fuel inflation, which recently ticked higher.
How long do bear markets last and how deep do they go?
On average, bear markets have taken 13 months to go from peak to trough and 27 months to get back to breakeven since World War II. The S&P 500 index has fallen an average of 33% during bear markets in that time. The biggest decline since 1945 occurred in the 2007-2009 bear market, when the S&P 500 fell 57%.
History shows that the faster an index enters into a bear market, the shallower they tends to be. Historically, stocks have taken 251 days (8.3 months) to fall into a bear market. When the S&P 500 has fallen 20% at a faster clip, the index has averaged a loss of 28%.
The longest bear market lasted 61 months and ended in March 1942. It cut the index by 60%.
When is a bear market over?
Generally, investors look for a 20% gain from a low point as well as sustained gains over at least six months. It took less than three weeks for stocks to rise 20% from their low in March 2020.
Should investors sell now?
If you need the money now or want to lock in the losses, yes. Otherwise, many advisers suggest riding through the ups and downs while remembering the swings are the price of admission for the stronger returns that stocks have provided over the long term.
While dumping stocks would stop the bleeding, it would also prevent any potential gains. Many of the best days for Wall Street have occurred either during a bear market or just after one ended. That includes two separate days in the middle of the 2007-2009 bear market when the S&P 500 surged roughly 11%, as well as leaps of better than 9% during and shortly after the monthlong 2020 bear market.
Advisers suggest putting money into stocks only if it will not be needed for several years. The S&P 500 has come back from every one of its prior bear markets to eventually rise to another all-time high.
The down decade for the stock market following the 2000 bursting of the dot-com bubble was a notoriously brutal stretch, but stocks have often been able to regain their highs within a few years.
President Donald Trump’s sharp tariff hikes last week have sent the stock market into a tailspin, raised alarm bells among Wall Street executives, and heightened many economists’ worries that the U.S. could tip into recession.
The tariffs, set to take effect Wednesday, include a 10% blanket duty on nearly all countries and additional import taxes on 60 nations. The increases are so large and are taking effect so rapidly that they are likely to be disruptive to the economy, economists say, even if they are partially rolled back through negotiations in the coming weeks or months.
Economists at Goldman Sachs have raised their assessment of the odds the U.S. will experience a recession — where the economy shrinks and unemployment rises — to 45%, from 35% last week. And even that forecast assumes many of the duties are negotiated away or reduced. If not, “we expect to change our forecast to a recession,” Jan Hatzius, Goldman’s chief economist, and his colleagues said in an analyst note.
Other economists are raising similar alarms, with JPMorgan putting the odds of a recession at 60% and projecting inflation will reach 4.4% by the end of this year, up from 2.8% currently.
Should the tariffs remain in place for an extended period, they will likely raise costs and uncertainty for businesses, which could reduce their willingness to hire, invest in new equipment or software, or expand into new markets. Americans could cut back on their spending in the face of higher prices. The economy could start to shrink after expanding 2.8% in 2024.
So far, most measures of the economy, such as job gains, remain solid. Employers added more jobs than expected in March, the government reported last week, and layoffs remain historically low.
Still, surveys show consumers and businesses are increasingly worried about the economic outlook. What everyone from Wall Street investors to economists to officials at the Federal Reserve will be watching closely is whether those concerns lead to a downturn.
Here are some questions and answers about recessions:
Are there any signs a recession is imminent?
Not yet. But one development that has sparked widespread fear is a real-time economy tracker maintained by the Federal Reserve’s Atlanta branch. It now indicates that the economy could shrink by 0.8% at an annual rate in the first three months of this year, down from 2.4% in last year’s final quarter.
The Atlanta Fed’s tracker is not technically a forecast but instead a running tally that is updated as economic data is released.
Typically, a recession occurs when some short of shock hits the economy, such as the pandemic in 2020, or the bursting of the housing bubble in 2007. It’s not yet clear that tariffs will have a large enough impact to knock the economy into reverse.
But economists at Wells Fargo, in a note on Friday, calculated that the average U.S. tariff would jump tenfold to about 23% when all the duties are in place, the highest since 1908.
Such a shift “practically overnight will throw sand in the gears of global supply chains in ways that we have not seen since the pandemic and perhaps since World War II,” Shannon Grein, an economist at Wells Fargo, wrote.
What are Trump and his officials saying?
On Sunday, Trump told reporters that “sometimes you have to take medicine to fix something.” Yet Treasury Secretary Scott Bessent on the same day said “there doesn’t have to be a recession” and that the administration is focused on “building the long-term economic fundamentals for prosperity.”
What signals would suggest that a recession has begun?
The clearest signal would be a steady rise in job losses and a surge in unemployment. The government’s weekly report on the number of people seeking unemployment benefits, which is released every Thursday, is being closely watched for signs of rising layoffs. So far, aid applications remain quite low by historical standards.
Torsten Slok, chief economist for Apollo, an asset management firm, is watching a range of real-time data and sees some signs the economy is weakening. The number of people filing for bankruptcy has risen, while visits to Las Vegas have declined a bit. Weekly visits to movie theaters this year are below their levels in recent years, he said.
What other factors besides tariffs could slow the economy?
The Trump administration is plowing ahead with widespread job cuts in federal agencies, such as the Department of Health and Human Services, and says it will cut government spending. Both could weigh on the economy, at least in the short run.
And even if some of the tariffs imposed on April 2 are pulled back or reduced, the uncertainty surrounding the Trump administration’s trade policies is likely to discourage spending by businesses or consumers. It’s unclear, for example, whether companies will build more factories in the U.S., as the tariffs are intended to encourage, if they don’t know how long the tariffs will last.
Another factor could be overseas boycotts of U.S. goods and travel. Slok has noted that airline bookings data point to a 70% drop in trips from Canada to the U.S. in the next six months. While the effect on the overall economy is likely to be minor, Goldman Sachs estimates such changes could shave 0.2 percentage points off growth this year.
How might the Federal Reserve respond?
Many economists now expect the Fed will cut their key interest rate at their meeting in June and implement at least three reductions this year.
But the Fed is in a difficult position: With inflation seemingly stuck above its target of 2%, even before the tariffs take effect, the central bank would typically want to keep borrowing costs high to slow spending and cool inflation.
Yet if tariffs weaken the economy and lead to job losses, the Fed would normally slash its key rate to stimulate borrowing and spending. Since tariffs could worsen inflation, however, it is unlikely to do so until there are clear signs of a sharp economic slowdown.
“They can’t really be proactive here because they do have inflation to worry about,” said Gennadiy Goldberg, head of U.S. rates strategy at TD Securities. “What we’re looking at is a Fed that is going to be stuck between a rock and a hard place.”
On Friday, Chair Jerome Powell said the tariffs could worsen inflation and added that the Fed’s main obligation was to keep prices in check. His comments suggested the Fed will likely stay on the sidelines at its next meeting in May.
Who decides when a recession has started?
Recessions are officially declared by the obscure-sounding National Bureau of Economic Research, a group of economists whose Business Cycle Dating Committee defines a recession as “a significant decline in economic activity that is spread across the economy and lasts more than a few months.”
The committee considers trends in hiring. It also assesses many other data points, including gauges of income, employment, inflation-adjusted spending, retail sales, and factory output. It assigns heavy weight to a measure of inflation-adjusted income that excludes government support payments like Social Security.
Yet the organization typically doesn’t declare a recession until well after one has begun, sometimes as long as a year afterward.
BROAD VIEW OF SECURITY
THINK BIG
Amid escalating trade tensions with the United States and a sharp sell-off in domestic equities, major Chinese state investment entities have pledged coordinated action to stabilize the capital markets and restore investor confidence.
On Monday, Central Huijin Investment, a key sovereign wealth fund under China Investment Corp, announced it had increased its holdings of Chinese exchange-traded funds (ETFs) and committed to further purchases. The move came as Beijing seeks to shore up markets rattled by fears of a prolonged trade war. Later that night, China Chengtong Holdings Group and China Reform Holdings Corporation also boosted their holdings of ETFs and shares of central state-owned enterprises.
These efforts were prompted by a sharp 7% decline in China’s stock benchmark on Monday, driven by concerns over U.S.-China trade tensions and broader global economic risks. The market downturn followed Washington’s announcement last week of a 34% tariff on Chinese imports, which Beijing matched with retaliatory duties. On Monday night, U.S. President Donald Trump escalated the rhetoric further, threatening to impose an additional 50% tariff unless China rolls back its countermeasures.
In response, Chinese authorities have moved swiftly. On Tuesday morning, Central Huijin reiterated its commitment in a state media interview, stating it would act as a “stabiliser” in the capital markets and would intervene to smooth out abnormal fluctuations. “When action is needed, we will act decisively,” an executive said. The fund also emphasized its robust financial health, citing a healthy balance sheet, ample liquidity, and smooth funding channels. It pledged to continue allocating capital to Chinese shares as “patient”, long-term capital.
The People's Bank of China (PBOC) expressed full support for Huijin’s actions. In a statement Tuesday, the central bank said it would increase its own purchases of stock-market index funds and provide relending support to Huijin when necessary to ensure the smooth functioning of the markets. The National Financial Regulatory Administration also announced it would raise the ceiling on insurance funds allowed to invest in equities, adding further long-term capital to the market.
Other state-owned investment firms joined the coordinated effort. China Chengtong Holdings Group declared that its investment units would continue to increase holdings in stocks and ETFs to safeguard market stability. “We are firmly optimistic toward the growth prospects of China's capital markets,” the firm stated, vowing to support the high-quality growth of listed Chinese companies.
China Reform Holdings Corp, also known as Guoxin, said it would increase investments in technology companies, state-owned enterprises, and ETFs, using a relending scheme to support share buybacks. The firm has earmarked an initial investment of 80 billion yuan for the effort.
In addition, China Electronics Technology Group said it would expand share buybacks in its listed subsidiaries to strengthen investor confidence.
Together, these actions reflect a unified stance by Chinese state capital to counteract market volatility and reinforce the stability of the financial system as the trade dispute with the U.S. intensifies. The coordinated moves aim to reassure investors that authorities are prepared to act decisively in the face of external shocks.
US businesses are hiking prices amid Trump's tariffs.
The Bogg Bag company, known for its perforated tote bags, is raising prices by $5 to partially offset tariffs.
Before April 2nd, the retailer was looking for places to expand its manufacturing, which at the time was all in China. The company was considering Vietnam and Sri Lanka, but given the recent levies, China might be the company's "best option."
Launching and running a business is rarely easy. But it’s gotten more difficult in recent months, The New York Times reports, as cuts to federal contracts, the elimination or reduction of agencies that serve small businesses, tariff-induced price anxiety, and skittish consumers have all converged. Entrepreneurs of all stripes report scrambling to figure out how to keep the lights on as challenges erupt from multiple sides. The atmosphere, per a CEO who supports small businesses, is “like a tornado.”
Investors are trying to game out how much tolerance U.S. President Donald Trump has for stock market losses after his latest tariff policies ignited a more than 10% wipeout on Wall Street, with some still holding out hope of eventual relief.
PAIN LEVEL
NO CAVALRY
Uncertainty surrounding the Trump administration's new tariffs has prompted an iPhone frenzy, with shoppers panic-buying phones, per The Wall Street Journal. Bloomberg also reported its retail stores saw an uptick in sales across several major markets, citing anonymous sources. The chaos also spooked investors, triggering a jaw-dropping 20% drop in Apple's stock price over three trading days. To help maintain stable pricing, Apple is working to shift iPhone production to India. However, the fix may be temporary, as its executives work to secure an exemption.
The latest data from the Federal Reserve shows that total consumer borrowing fell by $810 million, compared to expectations for a $15 billion increase. That’s not just a miss. It’s a reversal. A hard turn away from expansion. It tells us that consumers, facing uncertainty on multiple fronts, are pulling back.
What makes this especially noteworthy is that both key components of consumer credit weakened. Revolving credit (primarily credit card usage) was flat, rising just 0.1%. Non-revolving credit, which includes auto and student loans, fell by 0.3%, the first drop in almost a year. In a consumer-driven economy like the U.S., that kind of across-the-board hesitation doesn’t happen without a shift in sentiment.
Consumers were already facing high borrowing costs and elevated prices before the recent escalation in trade tensions. Credit card interest rates remain near historic highs, averaging over 21%. And subprime auto delinquencies have climbed to levels not seen since 1994. Even among higher-income households, the sharp stock market pullback and renewed recession talk may be leading to more guarded financial behavior.
This shift isn’t just financial. It’s psychological. When consumers start avoiding credit, they’re not just tightening budgets - they’re signaling doubt about the future. Confidence is fragile. Spending slows. And businesses that rely on financed purchases from home improvement to health services to durable goods will feel the impact first.
The implications are broad. Retailers may see softer conversion, even if traffic holds. Brands that rely on promotional financing may find it harder to close sales. Decision cycles lengthen. Price sensitivity intensifies. Even categories insulated from economic shocks can find themselves pulled into a more value-driven mindset. This is how slowdowns begin—not all at once, but in signs like these.
For the Federal Reserve, this creates a challenge. Inflation remains elevated. But with the consumer retreating, the credit environment tightening, and uncertainty rising, the central bank’s path forward becomes more complicated.