Trump threatens to hike China tariffs further as market plunge continues

A global trade war touched off by US President Donald Trump's sweeping tariffs escalated further on Monday, as Trump threatened to increase duties on China and the European Union proposed counter-tariffs of its own.

Financial markets across the globe posted a third day of losses as investors worried that steep trade barriers around the world's largest consumer market could lead to a recession. The S&P 500 closed lower after a rollercoaster session in which it touched its lowest level in more than a year.

Trump said the tariffs - a minimum of 10 per cent for all US imports, with targeted rates of up to 50 per cent - would help the United States recapture an industrial base that he says has withered over decades of trade liberalisation.

"It's the only chance our country will have to reset the table. Because no other president would be willing to do what I'm doing, or to even go through it," he told reporters at the White House. "Now, I don't mind going through it because I see a beautiful picture at the end."

Trump spoke hours after he ratcheted up a confrontation with China, the world's No. 2 economy.

Trump said he would impose an additional 50 per cent duty on US imports from China on Wednesday if it did not withdraw the 34 per cent tariffs it had imposed on US products last week. Those Chinese tariffs had come in response to 34 per cent "reciprocal" duties announced by Trump.

Beijing responded with defiance. Trump's threat was a "typical move of unilateralism, protectionism and economic bullying," Chinese embassy spokesperson Liu Pengyu said. "We have stressed more than once that pressuring or threatening China is not a right way to engage with us," he added. "China will firmly safeguard its legitimate rights and interests."

The European Commission, meanwhile, proposed counter-tariffs of 25 per cent on a range of US goods, including soybeans, nuts and sausages, though other potential items were left off the list, according to a document seen by Reuters.

Officials said they stood ready to negotiate a "zero for zero" deal with Trump's administration. "Sooner or later, we will sit at the negotiation table with the US and find a mutually acceptable compromise," EU Trade Commissioner Maros Sefcovic said at a news conference. The 27-member bloc is struggling with tariffs on autos and metals already in place, and faces a 20 per cent tariff on other products on Wednesday. 

US Treasury Secretary Scott Bessent met with Trump in Florida on Sunday, Politico reported, to urge him to emphasise striking trade deals with partners in order to reassure the markets that there is an endgame to the US strategy.

Trump said his administration would open trade talks with Japan, one of Washington's closest allies in Asia, and administration officials say dozens of other countries have reached out as well with the hope of heading off the tariffs as high as 50 per cent due to take effect on Wednesday.

The back-and-forth injected further turbulence into global financial markets, which have fallen steadily since Trump's announcement.

China's retaliatory levies are the firmest response yet to Trump's announcement, which has been met with bewildered condemnation from other leaders. After stocks in mainland China and Hong Kong cratered on Monday, China's sovereign fund stepped in to try to stabilise the market. Shares in Taiwan plummeted almost 10 per cent - the biggest one-day percentage fall on record.

Wall Street leaders issued warnings on US tariffs, with JPMorgan Chase CEO Jamie Dimon saying they could have lasting negative consequences, while fund manager Bill Ackman said they could lead to an "economic nuclear winter".

Billionaire Elon Musk, who is leading Trump's effort to slash government spending, called for zero tariffs between the US and Europe over the weekend. On Monday, Trump trade adviser Peter Navarro dismissed the Tesla CEO as a "car assembler".