BRUSSELS/BEIJING/WASHINGTON: US stocks sank on Thursday, giving back some of the huge gains that followed President Donald Trump's decision on Wednesday to temporarily lower his sweeping tariffs on dozens of countries, as investors assessed the status of his global trade war.
The S&P 500 index was down 5.2 per cent on Thursday afternoon, while the Nasdaq dropped 6.1 per cent and the Dow Jones Industrial Average was down 4.5 per cent.
The European Union said it would pause its first counter-tariffs, and more than a dozen countries have made offers to the United States, according to White House economic adviser Kevin Hassett. Trump's sudden decision on Wednesday to freeze most of his hefty new duties for 90 days brought relief to battered markets and anxious global leaders, even as he ratcheted up a trade war with China. But Trump's whipsaw approach has companies still worried about the potential fallout and scrambling to prepare for what could happen in three months. His turnabout, less than 24 hours after the tariffs kicked in, followed the most intense episode of financial market volatility since the early days of the Covid-19 pandemic. The EU had been due to launch counter-tariffs on about 21 billion euros ($23.25 billion) of US imports next Tuesday in response to Trump's 25 per cent tariffs on steel and aluminium. It is still assessing how to respond to US car tariffs and the broader 10% levies that remain in place.
China rejected what it called threats and blackmail from Washington.
China will follow through to the end if the US persists, Commerce Ministry spokesperson He Yongqian told a regular press briefing. China's door was open to dialogue, but this must be based on mutual respect, the ministry said.
Beijing may again respond in kind after already imposing 84 per cent tariffs on US imports on Wednesday to match Trump's earlier salvo.
Trump, who claims the tariffs aim to fix US trade imbalances, said a resolution with China is also possible. But officials have said they will prioritise talks with other countries as Vietnam, Japan, South Korea and others line up to try to strike a bargain. China's yuan hit its lowest level against the dollar on Thursday since the global financial crisis. In Europe, euro zone government bond yields jumped, spreads tightened and markets scaled back their bets on European Central Bank rate cuts after Trump's latest announcement. European shares surged.
The US tariff pause does not apply to duties paid by Canada and Mexico, because their goods are still subject to 25% fentanyl-related tariffs unless they comply with the US-Mexico-Canada trade agreement's rules of origin.
Oil prices retreated by more than 3 per cent on Thursday as fears of a deepening US-China trade war and a possible recession eclipsed earlier relief created by Trump's pause announcement.
Some central bankers also remained cautious. — Reuters
Oman Observer is now on the WhatsApp channel. Click here
