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Stocks fall again as Trump tariff jitters continue Stocks plunge for second day as Trump tariff turmoil deepens
(about 2 hours later)
Global stocks have slumped further after China hit back at US import taxes with retaliatory tariffs of its own. Turmoil on financial markets deepened on Friday, as China hit back at tariffs announced by Donald Trump, raising the likelihood of an extended trade war and damage to the global economy.
The main US indexes opened down nearly 3% while European markets were about 4% lower, with some companies seeing double-digit falls in their share prices. The S&P 500 index, the widest measure of the US stock market, was trading down roughly 4% in mid-day trade, while the Nasdaq had sunk about 4.3%, having lost roughly a fifth of its value since February.
The declines add to large falls seen on Thursday as markets continued to react to the uncertainty triggered by the US tariffs. In the UK, the FTSE 100 plunged almost 5% - its steepest fall in five years, while Asian markets also dropped and exchanges in Germany and France faced similar falls.
Traders are concerned the tariffs will increase prices and weigh on growth in the US and abroad. Trump, who has vowed to remake the global trade order, dismissed concerns about the market shock, noting that the US labour market is strong.
The news that China will add a 34% tariff on US goods from 10 April has increased fears of a drawn out trade war.
China's finance ministry says the US tariffs on Chinese products are "not in line with international trade rules". "Hang tough," he urged his followers on social media. "We can't lose."
When the sweeping new tariffs were announced by US President Donald Trump on Thursday, China was hit with a 54% rate, which include previous duties already in place. That makes China one of the hardest-hit countries on America's tariff list. The stock market has lost an estimated trillions in value over two days, a rout sparked by Trump's announcement of sweeping new 10% import taxes on goods from every country.
In the US, the tech-heavy Nasdaq opened down 2.8% on Friday, but it fell into what is known as "bear territory" - that is, it may close more than 20% lower than its recent peak in December. Goods from dozens of countries, including key trading partners such as China, the European Union and Vietnam, facing far higher rates.
The Dow Jones was more than 2% lower while the S&P 500 fell nearly 3%. Analysts say the moves, which are due to go into effect as soon as Saturday, amount to the biggest tax increase in the US since 1968.
Shares in tech giant Apple fell more than 3%, and have dropped 12.5% over two days. It outsources much of its production to China, which faces an aggregate 54% US tariff rate. They expect the measures to lead to a contraction in trade, and have warned they could drive many countries into an economic recession.
In Europe, the FTSE 100 index was down 4.6% while in Germany the Dax was 4.4% lower. China responded on Friday by adding hitting US goods with import taxes of 34%, curbing exports of key minerals and adding US firms to its blacklist, describing Trump's actions as "bullying" and a violation of international trade rules.
Other countries have yet to respond and appear hoping they will be able to negotiate deals, despite conflicting signals from the White House about its appetite for talks.
On Friday Trump said he had a "very productive call" with the general secretary of Vietnam, while criticising China's move.
"China played it wrong, they panicked - the one thing they cannot afford to do," Trump wrote on social media in all capital letters.
Live: Follow the latest reaction to the US tariffsLive: Follow the latest reaction to the US tariffs
At a glance: What Trump's new tariffs mean for the EU, China and othersAt a glance: What Trump's new tariffs mean for the EU, China and others
Explainer: What are tariffs and why is Trump using them?Explainer: What are tariffs and why is Trump using them?
Trump's announcement on Wednesday left goods from China facing an added 34% tariff rate, raising the overall levy to at least 54%.
He announced a new 20% tax on goods from the EU, and rates of more than 40% on countries in Asia such as Vietnam, which have become key centres of manufacturing since Trump started raising tariffs on China in his first term.
Trump had made similar promises on the campaign trail last year. But the moves were still more far-reaching than many analysts had expected.
"The shock factor… was Vietnam," said Simeon Siegel, managing director at BMO Capital Markets, who follows companies such as Nike, which saw shares tumble on Thursday after the announcements.
"For the past many years, most companies had been trained to believe they needed to lean out from China, but that didn't mean lean into the US," he added. "But the only place to hide, at least as of [Trump's announcement], was the US."
In the UK, the FTSE 100 index closed 4.95% lower, the biggest one-day drop since 27 March 2020.
In Europe, France's CAC 40 was down 4% while in Germany the Dax was roughly 4.6% lower.
Earlier, in Japan, where the prime minister called the situation a "national crisis", the Nikkei 225 fell more than 2.7%.
Russ Mould, investment director at AJ Bell, said the "relentless selling" had continued despite investors "hoping the pain would go away".Russ Mould, investment director at AJ Bell, said the "relentless selling" had continued despite investors "hoping the pain would go away".
"There are so many moving parts that getting your head around the situation [as an investor] isn't easy," he said."There are so many moving parts that getting your head around the situation [as an investor] isn't easy," he said.
"With countless sectors set to be hit by tariffs, it's difficult to know where to begin to comprehend the situation.""With countless sectors set to be hit by tariffs, it's difficult to know where to begin to comprehend the situation."
Jane Sydenham, investment director at Rathbones, said banking stocks, firms with supply chains that were exposed to tariffs, and tech stocks had all been falling.
Investors had been buying into safe haven assets including gold and government bonds, she said.
Gold was above $3,121 an ounce on Friday, back near record highs, while bond yields were down, according to Trading Economics.
China had been "under severe pressure" to respond to tariffs of 54% on most goods, Ms Sydenham said, and its economy was big enough to be able to take such action.
But countries with smaller economies were having to be more cautious, she added.
Leah Fahy, China economist at Capital Economics, said the country had "hit back hard" against US tariffs.
She said the "aggressive, escalatory" response "makes a near-term deal to end the trade war between the two superpowers highly unlikely".
The dollar index, which measures the value of the US currency against six peers, had sunk 1.9% on Thursday, the sharpest drop since November 2022, but on Friday it steadied, rising by 0.35%.
Oil prices fell sharply as traders worried that the tariffs could slow economic growth and worsen trade disputes.
The price of a barrel of Brent crude slumped more than 6% to $65.35 a barrel.
The managing director of the International Monetary Fund (IMF), Kristalina Georgieva, has said the new tariffs "clearly represent a significant risk to the global outlook at a time of sluggish growth".
She said the IMF was still looking into the "macroeconomic implications" of the measures and stressed the need to avoid actions that could do more damage to the global economy.