BEIJING/WASHINGTON/LONDON: Beijing increased its tariffs on US imports to 125 per cent on Friday, hitting back against US President Donald Trump's decision to hike duties on Chinese goods and raising the stakes in a trade war that threatens to upend global supply chains.
US markets churned as China's retaliation intensified global economic turmoil unleashed by Trump's tariffs. One US survey of consumers showed inflation fears have mounted to their highest since 1981.
"Recession risk is much, much higher now than it was a couple weeks ago," said Adam Hetts, global head of multi-asset at Janus Henderson.
Foreign leaders have puzzled over how to respond to the biggest disruption to the world trade order in decades. Trump's administration stuck to its guns, touting discussions on a number of trade deals it says will justify its dramatic upheaval in policy.
"We are doing really well on our TARIFF POLICY. Very exciting for America and the World!!! It is moving along quickly," Trump posted on social media on Friday.
The tit-for-tat tariff increases by the US and China stand to make goods trade between the world's two largest economies impossible, analysts say. That commerce was worth more than $650 billion in 2024.
The dollar slid and a sell-off intensified in US government bonds, the world's biggest bond market. Gold, a safe haven for investors in times of crisis, scaled a record high.
With the dollar weakening, selling of US assets was perhaps most exemplified by the drop in prices of the US 10-year Treasury note, long considered among the world's safest investments.
The decline drove its yield — which moves opposite to the price and is critical for determining things like interest rates on mortgages — up to a two-month high. On the week, its yield has climbed more than half a percentage point, the largest weekly increase in more than four decades.
A second day of data on US inflation showed price pressures were not yet building broadly across the US economy, although the Producer Price Index for March did show industrial metals prices rising due to import levies on things like steel and aluminium, in place for a month now.
"Tarifflation will be much more important for the outlook than backward-looking data," said Bill Adams, chief economist at Comerica Bank. "If tariffs stay in place, they will push inflation considerably higher in coming months."
The Trump administration has shrugged off market turmoil, saying striking deals with other countries would bring certainty. Greer said that he will speak to Israeli and Taiwanese counterparts on Friday after holding a long discussion with the Vietnamese.
"I have a full dance card," said Greer. Meanwhile, India and the US have finalised terms of reference for talks over the first segment of a bilateral trade deal, an Indian trade official said. — Reuters
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