European markets were rocked on Wednesday as China's finance ministry announced a massive 84% tariff on all goods imported from the US, sparking fresh fears over a global trade war. The news sent the FTSE 100 (^FTSE) tumbling by 3.4%, while continental indices followed suit in a sharp sell-off.
The new tariffs, set to take effect from 12:01 CST (05:00 BST) on 10 April, mark a dramatic escalation in trade tensions between the world’s two largest economies. In a strongly worded statement, China said it was forced to take “firm and forceful” measures to safeguard its interests after the US imposed a 104% tariff on Chinese imports earlier today.
Markets React Sharply to Escalating Trade War
Investors wasted no time pricing in the economic fallout. Germany’s DAX (^GDAXI) fell by 3.9%, mirroring the drop in France’s CAC 40 (^FCHI). The broader STOXX 600 (^STOXX) index slumped by 4%, reflecting widespread concern over the ripple effects of deepening trade tensions.
Oil prices also sank, with Brent crude (BZ=F) futures dropping to $58.47, their lowest level since February 2021. The commodity’s steep decline reflects investor anxiety over global demand amid a slowdown in cross-border trade.
China Slams US Policy as "Economic Bullying"
In a scathing statement, China’s finance ministry blasted the US approach as “a mistake on top of a mistake,” accusing Washington of violating international trade norms and damaging the global economic order.
“It is a typical example of unilateralism, protectionism, and economic bullying,” the ministry declared. “China urges the US to immediately correct its wrong practices, cancel all unilateral tariff measures against China, and properly resolve differences through equal dialogue based on mutual respect.”
Global Economic Fears Rise
The trade battle’s impact is being felt well beyond Beijing and Washington. Germany’s finance minister Joerg Kukies warned that Europe’s largest economy could face another recession if tensions continue to escalate, raising fresh concerns about the fragile state of the Eurozone recovery.
Across the Atlantic, Wall Street is bracing for a rough session, with S&P 500 (ES=F), Dow Jones (YM=F), and Nasdaq (NQ=F) futures all pointing lower in pre-market trading.
Meanwhile, the pound (GBPUSD=X) edged up 0.2% against the US dollar, trading at 1.2801, as investors sought relative safe havens in currency markets.
Global Leaders Look for Off-Ramps
In an attempt to cool rising tensions, US President Donald Trump said that other nations were eager to mediate and “negotiate a deal.” Delegations from Japan and South Korea are reportedly en route to Washington, hoping to broker a resolution that might ease pressure on international markets.
What This Means for Traders
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