In a sharp response to President Donald Trump’s sweeping tariff increases, China announced a 34% tariff on all U.S. imports beginning April 10.
The move sent Chinese markets tumbling, with the China 33.22 index sliding nearly 2% in a single session. No sector was spared from the sell-off. Technology giants Alibaba (BABA), JD.com (JD), and Baidu (BIDU) joined automakers like Nio (NIO) and XPeng (XPEV) and consumer-facing firms such as Trip.com and Yum China in deep red territory.
E-commerce powerhouse PDD, operator of the fast-growing Temu platform, failed to attract buyers even after a brutal Thursday for tech stocks. Market sentiment soured further following Trump’s decision to close the de minimis trade loophole—an essential pillar of Temu and rival Shein’s U.S. strategy. Chinese stocks, already under pressure from increased scrutiny and geopolitical tensions, are now contending with what appears to be the opening salvo of a prolonged trade conflict.
Investors, faced with limited visibility on future developments, are retreating from risk, even in companies with minimal U.S. exposure. China's equity markets, which had been buoyed in recent months by steady consumer demand and improving manufacturing data, are now in the crosshairs of global uncertainty.
Wall Street Plunges as Recession Fears Mount
The ripple effects were felt far beyond Beijing. U.S. markets plunged Friday, deepening what is shaping up to be one of the worst weeks since the pandemic crash of March 2020. The Dow Jones Industrial Average dropped over 1,000 points, a 2.5% decline. The S&P 500 shed 2.86%, and the tech-heavy Nasdaq lost 2.88% as a massive $2.5 trillion in market value evaporated in just two days.
Major names like Nvidia (NVDA) and Tesla (TSLA) led the sell-off, each falling 6-7% amid fears that tech firms would be collateral damage in a worsening trade dispute. Oil prices cratered, with West Texas Intermediate plunging more than 8% to $61 per barrel, the lowest level in years. Brent crude followed suit, breaking below $65.
Market participants are bracing for deeper economic fallout. Bond yields fell sharply as investors flocked to safe havens. Ten-year Treasury yields dropped below 3.9%, while traders rapidly increased bets on rate cuts—pricing in four cuts by year-end, up from three before the tariff announcements.
A Global Trade War in Motion
China’s response mirrors the scale and intent of Trump’s latest tariff escalation, which brought total duties on Chinese goods to 54%. Beijing's retaliation included not just tariffs, but an array of punitive measures: suspension of U.S. agricultural imports, controls on rare-earth exports, and export bans targeting 30 U.S. defense-related organizations. Beijing also launched anti-dumping investigations and added several U.S. companies to its “unreliable entity” list.
The impact on U.S. exporters will be swift. With soybeans, oilseeds, fuels, and electrical machinery among China's top imports from the U.S., the new tariffs could effectively shut American agricultural products out of the Chinese market. Analysts believe countries like Brazil and Australia are poised to fill the gap, shifting global trade flows away from the U.S.
In Europe, markets joined the global sell-off. The Stoxx 600 fell more than 4%, its worst week in three years. The DAX and CAC indexes posted similar losses. European Commission President Ursula von der Leyen signaled potential countermeasures, while French President Emmanuel Macron called for suspending investment in the U.S. if diplomacy fails.
As trade tensions escalate and negotiations falter, the global economy may be entering a new era of fragmentation and uncertainty. What began as a bilateral tit-for-tat has now evolved into a broad-based retreat from globalization, with recession fears looming and investor confidence rapidly eroding.
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