China and EU retaliate against tariffs as Trump says ‘great time to move companies to the US’ – business live
Donald Trump: now is “great time to move your company” to the US
Donald Trump has claimed that it is a “great time to move your company” to the US, with global stock markets reeling because of the president’s trade war.
Trump imposed a 104% tariff on China, which has responded with an 84% tariff in retaliation. That has deepened concerns that the trade war will trigger a global recession.
However, Trump has argued that the tariffs are a necessary tool to revive US manufacturing. On Wednesday morning he claimed that “record numbers” of companies are moving back to the US, despite the turmoil.
On his social network, Truth Social, he wrote:
This is a GREAT time to move your COMPANY into the United States of America, like Apple, and so many others, in record numbers, are doing. ZERO TARIFFS, and almost immediate Electrical/Energy hook ups and approvals. No Environmental Delays. DON’T WAIT, DO IT NOW!
Stock markets have suggested that investors are less impressed, with markets expected to fall for a fifth consecutive day on Wednesday.
Key events
British 30-year government bond yields surged to their highest since May 1998 on Wednesday, after another sharp rise in US Treasury yields driven by president Donald Trump hitting China with 104% tariffs.
The 30-year British gilt yield peaked at 5.649% at 12.22pm GMT, up more than 30 basis points on the day, before easing back to show a rise of about 18 bps at 5.53% at 3pm GMT, Reuters reported.
The rise was roughly on par with Monday’s increase, which was the biggest one-day move since shortly after former prime minister Liz Truss’ failed “mini-budget” in October 2022. Long-dated bond yields have rocketed across major economies, led by US Treasury yields. Japanese yields hit a 21-year high.
But Wednesday’s increase in British 30-year gilt yields was sharper than a 10 bps rise in equivalent US Treasuries, reminding some analysts of Britain’s fiscal vulnerabilities.
“The problem now for the UK bond market is one of liquidity and positioning,” said Kathleen Brooks, research director at brokers XTB.
On Wednesday the Bank of England, in a quarterly update on financial risks, noted that hedge funds had 61 billion pounds ($78bn) of net gilt repo borrowing last month, up from 4 billion pounds at the start of 2024.
“Use of leverage, if not properly managed, could amplify shocks and cause a jump to illiquidity,” the BoE said.
Larry Elliott
Donald Trump’s decision to impose a 104% tariff on Chinese imports into the US has spooked the financial markets. The response is entirely rational.
Over the past few decades, phoney trade wars have been commonplace. Rival nations have squared off against each other, indulged in a bit of sabre-rattling, but eventually agreed on a deal. Headlines that screamed “trade war looms” were quickly replaced by those that read “trade war averted”.
This time it’s different. The battle between the US and China prompted by Trump’s tariffs is no pretend trade war. It is the real deal – and it will have real consequences. Tariffs operate as a tax, adding to the costs of doing business and raising prices for consumers. Growth will slow and inflation rates will rise. The global economy was already growing only slowly. As things stand, it is now heading for recession.
Trump seems prepared for this, making it clear that he is ready for some short-term pain for what he thinks will be long-term gains: a revitalised US industrial base and higher exports. This also represents a shift in approach. In the past, US policymakers have tended to take fright at big falls on Wall Street and have eased policy to limit the damage.
Not this time, it appears. Or at least not yet. Trump promised to impose swingeing tariffs when he was running for president last year, but the expectation was that this was just campaign rhetoric. Instead, he has delivered on his pledges – and then some.
Jennifer Rankin
The EU has agreed to impose retaliatory tariffs on €21bn (£18bn) of US goods, targeting farm produce and products from Republican states, in Europe’s first act of retaliation against Donald Trump’s tariffs.
The EU plans to introduce 25% tariffs on scores of goods from almonds to yachts, with the first duties being collected from 15 April, while the bulk apply from 15 May and the remainder from 1 December.
In a statement confirming the favourable vote by EU member states, the European Commission said: “The EU considers US tariffs unjustified and damaging, causing economic harm to both sides, as well as the global economy.”
It added: “These countermeasures can be suspended at any time, should the US agree to a fair and balanced negotiated outcome.”
All member states voted for the retaliation, with the exception of Hungary, whose prime minister, Viktor Orbán, is one of Trump’s strongest supporters. “Such measures would cause further damage to [the] European economy and citizens by raising prices. The only way forward is negotiations, not retaliation,” Hungary’s foreign minister, Péter Szijjártó, wrote on social media.
The EU decision came after China announced it was hitting all US goods with 84% tariffs from Thursday, up from the 34% previously announced.
JP Morgan Chase CEO Jamie Dimon warned on Wednesday that a US recession seems increasingly likely as president Donald Trump’s tariffs rattle financial markets.
Stocks and bonds plummeted in morning trading, with stock futures dropping and bond yields rising as concerns over economic stability continue to grow. Dimon, speaking on Fox Business, said a 2,000-point drop in the Dow “feeds on itself,” leading people to feel the pinch in their 401(k)s and pensions, prompting them to cut back.
“I think probably [a recession is] s a likely outcome, because markets, I mean, when you see a 2000-point decline [in the Dow Jones industrial average], it sort of feeds on itself, doesn’t it,” Dimon said on Fox Business’ “Mornings With Maria” show. “It makes you feel like you’re losing money in your 401(k), you’re losing money in your pension. You’ve got to cut back.”
With the trade war showing no signs of easing, recession fears are mounting on Wall Street as the uncertainty deepens.
Fiona Harvey
Plans for a levy on the carbon produced by ships are being opposed by the US government, on the apparent basis they would “impose substantial economic burdens” and “drive inflation”.
There will be fierce debate in London this week on the future of global shipping over the proposals to charge up to $150 (£117) a tonne for the greenhouse gas emissions from ships. Those in support say the measure will be crucial to generating billions of dollars of climate finance a year to help poor countries cope with the impact of the climate crisis.
But now the US appears to have joined China, Brazil, Saudi Arabia and at least a dozen other states in opposing the levy at the International Maritime Organization negotiations. A leaked document seen by the Guardian, which has not yet been verified by the US government, purports to threaten countries with “reciprocal measures” if they agree to any levy.
The document appears to have been sent to governments at the talks to urge them to “reconsider any support for the GHG [greenhouse gas] emissions measures under consideration”.
However, sources suggest the US is still present and taking part in the talks, which are scheduled to carry on until late afternoon on Friday.
Donald Trump bragged about countries “kissing my ass” to negotiate tariffs during a dinner for Republicans on Tuesday.
The US president said:
We’re going to do much better than that this time, because this time I’m doing what I want to do with respect to the tariffs.
He added that Congress should not get involved in the negotiations because “they don’t negotiate like I negotiate”.
Oil price slump means Russian price cap is ‘meaningless’
Jillian Ambrose
The Kremlin can effectively shrug off the G7’s price cap on Russian oil exports after the global benchmark price slumped below $60 a barrel.
The $60 cap on Russian oil exports was put in place in late 2022 – when oil traded at well over $100 a barrel – to limit the oil revenues that Moscow could put towards its war efforts in Ukraine without inflating oil market prices further by banning their exports altogether.
It effectively barred all G7 and EU nations from purchasing Russian barrels above $60 – or providing shipping, insurance, brokering, trade finance, and other support services for any deals done above the cap.
Russia was able to bypass the cap through a series of loopholes including the use of a shadow fleet of aging oil tankers to carry cargoes at the usual market rates. Experts believe it may still have cost the Kremlin around €34bn in export revenues in its first year, or roughly two months worth of earnings.
But the aggressive sell-off in the oil market over the past week over fears of a global economic recession has meant the cap is “currently meaningless”.
Clayton Seigle, a senior fellow the Center for Strategic and International Studies (CSIS) in Washington DC, told the Guardian that the G7 could now considering “tightening the screws” on the Kremlin by lowering the cap.
I personally would be in favour of lowering the cap even further. There might be a willingness within the G7 to do this to punish Moscow, especially because there are no real fears about leaving the market under-supplied.
But it’s a political decision.
The UK government was approached for comment.
While share prices on Wall Street appear to be taking a breather after four days of selling, investors are clearly asking themselves if it is worth owning US assets at all.
George Saravelos, head of foreign exchange research at Deutsche Bank, wrote in a note to clients today that he feared that disorderly markets could eventually force the Federal Reserve to step in.
He wrote:
We are witnessing a simultaneous collapse in the price of all US assets including equities, the dollar versus alternative reserve FX and the bond market. We are entering uncharted territory in the global financial system.
Saravelos argued that Trump’s hopes of reducing bilateral trade deficits are “functionally equivalent to lowering demand for US assets as well”.
He also noted that the next stage of escalation with China will be key. There could be serious problems if the US tries to use its financial power against China. Saravelos wrote:
With a 100%+ tariff on China, there is little room now left for an escalation on the trade front. The next phase risks being an outright financial war involving Chinese ownership of US assets, both on the official and private sector front. It is important to note there can be no winner to such a war: it will damage both the owner (China) and the producer (US) of those assets. The loser will be the global economy.
The Federal Reserve could cushion some of the blow, he argued, but in the end only one thing can properly stabilise markets: “a reversal in the policies of the Trump administration itself”.
Donald Trump is clearly watching the stock market closely this morning in the US.
On Truth Social, the platform he owns, he wrote:
BE COOL! Everything is going to work out well. The USA will be bigger and better than ever before!
And that was followed by:
THIS IS A GREAT TIME TO BUY!!! DJT
It appears that some investors agree, as the selling pressure has eased on stock indices. The FTSE 100 is now down 2.1% – still a fairly painful move over a single day, but less remarkable.
Oil prices have recovered somewhat, with Brent crude futures back above $60 per barrel.
In the space of a few minutes the US markets have turned around: the S&P 500 is now up by 0.4%.
The Dow Jones industrial average – a less useful gauge – is still down by 0.3%. And to round off the mixed bag, the Nasdaq is up by 1%.
