Global Markets Tumble as US-China Trade War Deepens

Global stock markets plunged Friday following China’s announcement of 34% retaliatory tariffs on U.S. goods, intensifying trade tensions with the U.S. and raising recession fears. The Nasdaq entered a bear market, falling from its December 16 high of 20,173.89, while the Dow slipped into correction territory. For the week, the S&P 500 dropped 9.08%, the Nasdaq 10.02%, and the Dow 7.86%. The Russell 2000 slid 9.70%.

In response to escalating tariffs, China also restricted exports of certain rare earth elements and added 11 U.S. entities to its “unreliable” list, targeting firms involved in arms sales to Taiwan. Meanwhile, President Trump remained defiant, promising economic victory and urging the Fed to cut interest rates. Federal Reserve Chair Jerome Powell warned that the tariffs increased risks of inflation and slower growth, signaling caution in future policy moves.

J.P. Morgan now predicts a 60% chance of a global recession by year-end. Despite a strong U.S. jobs report, analysts warn Trump’s tariff hikes—now at the highest levels in over a century—could erode business confidence and hurt consumers.

Canada, Japan, and the EU also faced economic fallout. Canada’s job numbers declined, while Japanese stocks saw their worst week in years. EU leaders criticized the U.S. tariffs, with internal divisions over how to respond. French President Emmanuel Macron urged firms to freeze U.S. investments, though others warned against retaliatory measures.

Trump extended ByteDance’s TikTok sale deadline and claimed tariffs would boost domestic manufacturing. However, rising import costs may hurt consumers, with projections showing iPhone prices could surge past $2,300 if Apple passes on the tariff burden.

As tensions rise, investors remain wary of a prolonged trade war between the world’s two largest economies.