A global stock market rout intensified on Monday as recession fears mounted following China’s retaliation against US President Donald Trump’s tariffs and Europe’s move to calibrate its response to the spiralling trade war.
Asian markets bore the brunt of the selloff, with Hong Kong’s Hang Seng index plunging 13.2 percent in its worst single-day drop since the 1997 Asian financial crisis. Japan’s Nikkei 225 also slid a staggering 7.8 percent. European equities were also deep in the red.
A 10 percent “baseline” tariff on global imports took effect Saturday, with higher duties of 34 percent on Chinese goods and 20 percent on EU products set to begin Wednesday. In response, China last week announced its own 34-percent tariff on US goods, effective Thursday.
“These tit-for-tat duties aim to bring the United States back onto the right track of the multilateral trade system,” said China’s Vice Commerce Minister Ling Ji, who told US company representatives that the “root cause” lies with Washington.
Meanwhile, EU trade ministers met in Luxembourg to finalize a collective response. French Trade Minister Laurent Saint-Martin said, “We must not exclude any option on goods, on services,” and called for using the EU’s full “toolbox” to respond aggressively if necessary.
Germany’s Economy Minister Robert Habeck echoed similar sentiments, urging the bloc to consider using its new anti-coercion “bazooka” against economic threats. However, Ireland expressed reservations, warning that targeting services would mark “an extraordinary escalation.”
EU trade chief Maros Sefcovic said the bloc is witnessing a “paradigm shift of the global trading system.”
President Trump, meanwhile, remained defiant. “Sometimes you have to take medicine to fix something,” he said aboard Air Force One, brushing off market panic. He reiterated that no trade deals will be made unless deficits are addressed.
Global losses widened Monday, wiping trillions off stock values. Taiwan’s stock index sank a record 9.7 percent. Frankfurt’s DAX dropped as much as 10 percent in early trading before trimming losses to around four percent by midday. Paris and London posted similar declines, and US markets were expected to open sharply lower.
US oil also slid below $60 a barrel for the first time since April 2021 amid rising recession fears.
“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.
Over 50 countries have reportedly contacted Trump’s administration to negotiate. Japan, facing a 24-percent levy, is expected to present a package deal to the US president. Israeli Prime Minister Benjamin Netanyahu—whose country was slapped with 17-percent tariffs—is scheduled to meet Trump, the first foreign leader to do so post-announcement.
British PM Keir Starmer warned in an op-ed that “the world as we knew it has gone,” and that the future now depends on “deals and alliances.”
Vietnam, which runs a large surplus with the US, has requested a 45-day delay on newly announced 46-percent tariffs.
US Treasury Secretary Scott Bessent said on NBC’s Meet the Press that Trump has “created maximum leverage,” adding that the administration would assess offers on merit. “These countries have been bad actors for a long time,” he said, cautioning that the issue can’t be resolved in “days or weeks.”
