Washington/Brussels: Stock markets in the US ended their worst week since the 2020 pandemic and banks began to forecast a recession in the world’s largest economy after President Donald Trump’s unprecedented tariffs sparked retaliation from China and sparked fears of a global trade war.
Trump accused Beijing of panicking and said China “played it wrong” by responding to his additional 34 per cent tariff on Chinese imports with an equivalent duty on all American goods. Beijing had earlier condemned the US president for “bullying” and endangering international economic development.
Meanwhile, British Prime Minister Keir Starmer was planning to spend the weekend calling other world leaders, urging them to resist an all-out trade war, having spoken to both Prime Minister Anthony Albanese and Italy’s Giorgia Meloni on Friday.
A spokeswoman for Albanese confirmed the pair had affirmed their support for “free and fair trade” and the need for leaders to ensure there was not an escalation of trade impediments.
The Trump administration and top Republican leaders emphasised a stronger-than-expected US employment report released on Friday (Saturday AEDT) that revealed 228,000 jobs were added in March. But it was not enough to temper a further tariff-driven sell-off, with the Dow Jones falling 5.5 per cent in its biggest one-day drop since 2020, and the NASDAQ closing nearly 1000 points lower, officially entering a bear market.
A record $US6.4 trillion ($10.4 trillion) has been wiped from US markets in the two days since Trump announced his worldwide tariffs. London’s FTSE 100 also fell nearly 5 per cent on Friday.
The country’s largest bank, JPMorgan, expected the US to fall into recession this year. Its chief US economist, Michael Feroli, said the bank predicted gross domestic product to contract by 0.3 per cent “under the weight of the tariffs” and unemployment to rise to 5.3 per cent from 4.2 per cent.
US Federal Reserve chairman Jerome Powell said the tariffs Trump unveiled this week – a 10 per cent “baseline” tax on all imports, and higher rates for about 60 countries – went further than predicted and would likely cause at least a temporary increase in inflation, although he warned the effects could be persistent.
