A global stock market rout deepened on Monday, with Hong Kong crashing as US President Donald Trump stood firm on tariffs despite fears that his trade war could spark a recession.
Hong Kong’s Hang Seng index sank 13.2 percent, its biggest drop since the 1997 Asian financial crisis, while Tokyo’s Nikkei 225 fell an eye-watering 7.8 percent.
Countries mostly have been scrambling to blunt the new US tariffs without retaliating, but Beijing is responding in kind, escalating the trade war between the world’s two biggest economies.
A 10-percent “baseline” tariff on imports from around the world took effect on Saturday but a slew of countries will be hit by higher duties from Wednesday, with levies of 34 percent for Chinese goods and 20 percent for EU products.
Beijing announced last week its own 34-percent tariff on US goods, which will come into effect on Thursday.
The tit-for-tat duties “are aimed at bringing the United States back onto the right track of the multilateral trade system”, Chinese vice commerce minister Ling Ji said.
“The root cause of the tariff issue lies in the United States,” Ling told representatives of US companies on Sunday, according to his ministry.
EU trade ministers will weigh their response at a meeting on Monday, with the bloc’s trade chief, Maros Sefcovic, telling reporters in Luxembourg that they were facing a “paradigm shift of the global trading system”.
Trump on Sunday doubled down on his demand to slash deficits with trading partners, saying he would not cut any deals unless that was resolved.
“Sometimes you have to take medicine to fix something,” he said.
He told reporters aboard Air Force One that world leaders were “dying to make a deal”.
Trillions of dollars have been wiped off stocks worldwide since Trump announced the tariffs last week, and the losses deepened on Monday.
Taipei recorded its heaviest loss on record as it sank 9.7 percent.
In Europe, Frankfurt’s DAX sank as much as 10 percent in early deals before paring back losses.
The German index and Paris were down over six percent in late morning deals, while London fell 4.5 percent.
US markets were expected to open deep in the red later on Monday.
The main US oil contract dropped below $60 a barrel for the first time since April 2021 on worries of a global recession.
“(This) is blunt-force economic warfare,” said Stephen Innes at SPI Asset Management.
“The market’s telling you in plain language: global demand is vanishing, and a global recession is on the cards and coming on fast,” Innes said.
Trump’s staggered deadlines have left space for some countries to negotiate, even as he insisted he would stand firm and his administration warned against any retaliation.
“More than 50 countries have reached out to the president to begin a negotiation,” Kevin Hassett, head of the White House National Economic Council, told ABC’s This Week on Sunday.
Japanese Prime Minister Shigeru Ishiba, whose country faces a 24-percent levy, said on Monday that Tokyo would present Trump with a “package” of measures to win relief from US tariffs ahead of a mooted call between the leaders.
Benjamin Netanyahu, prime minister of Israel — hit with 17 percent tariffs, despite being one of Washington’s closest allies — was due on Monday to become the first leader to meet Trump since last week’s announcement.
British Prime Minister Keir Starmer warned in a newspaper op-ed that “the world as we knew it has gone”, saying the status quo would increasingly hinge on “deals and alliances”.
Vietnam, a manufacturing powerhouse that counted the United States as its biggest export market in the first quarter, has already reached out and requested a delay of at least 45 days to thumping 46-percent tariffs imposed by Trump.
US Treasury Secretary Scott Bessent told NBC’s Meet the Press that Trump has “created maximum leverage for himself”.
“I think we’re going to have to see what the countries offer and whether it’s believable,” Bessent said.
Other countries have been “bad actors for a long time and it’s not the kind of thing you can negotiate away in days or weeks”, he said.
Trump and US officials have rejected arguments that the tariffs would reignite inflation and damage the US economy.
Peter Navarro, Trump’s tariff guru, shrugged off investor panic.
“You can’t lose money unless you sell,” he said, promising “the biggest boom in the stock market we’ve ever seen”.