Tariffs stay: Global markets unstable whereas Trump says US ‘doing really well’ on commerce coverage

China’s foreign ministry spokesperson Lin Jian said trade wars have no winners, after Beijing lifted its tariffs on US goods to 125 per cent.

The hike was in response to the US lift its levies on Chinese goods to 145 per cent, despite introducing a 90-day pause on all other tariff increases over 10 per cent.

Here’s what Mr Lin said in his daily press conference on Friday:

China has repeatedly stated its solemn position on the tariff issue. Tariff and trade wars have no winner. China does not want to fight these wars but is not scared of them.

Let me stress that if the U.S. truly wants to resolve the issue through dialogue and negotiation, it should stop maximum pressure and capricious and destructive behavior. This never works with China.

For any dialogue to happen, they must be based on equality, respect and mutual benefit. If the U.S. is determined to fight a tariff and trade war, China’s response will continue to the end.

The European Union’s economic commissioner has pointed out the US is hurting itself first through widespread tariff increases.

Valdis Dombrovskis has been at a meeting of European economic and finance ministers and central bankers in Poland, and said the group welcomed the 90-day pause on tariffs over 10 per cent.

“What is clear, and what ministers in today’s meeting agreed on, is that the US itself will be the first and most hit by the tariffs,” he said following the Warsaw meeting.

“The imposition of tariffs will weaken the US economy by reducing consumers’ purchasing power, real wages and making imported intermediate goods for production more expensive.”

The EU Commissioner for Economy and Productivity said a loss of investor confidence could also hit American economic activity, with EU modeling showing US GDP would be reduced by 0.8 to 1.4 per cent until 2027, while Europe’s GDP would only take a 0.2 per cent hit.

“Given the extraordinary uncertainty and frequently changing tariff decisions, our model simulations cannot be fully precise,” he said.

“But they do show the overall trend that tariffs are damaging for prosperity.”

Ireland’s deputy premier said negotiations over the weekend between the European Union and the US will be “vital” to reaching an agreement on tariffs.

European commissioner for trade and economic security, Maros Sefcovic is travelling to Washington for talks on Sunday with US officials over tariffs.

The trip comes after Donald Trump announced a 90-day pause on higher levies, and the EU then announced it would also pause the introduction of countermeasures.

Simon Harris said it was important to use the time wisely.

“This is a vital weekend, and I think there isn’t an hour to lose, because we have a 90-day pause,” he said on Friday.

“But 90 days can come and go quickly, and it’s really important that there’s very intensive engagement now between Europe and between the United States.

While the US has paused placing 20 per cent tariffs on EU goods, Mr Harris noted the broader 10 per cent duties remained in place, as well as 25 per cent taxes on vehicles, steel and aluminium.

“It cannot be good for the global economy. So it is really important that we actually utilise this pause and put it to good use, “ he said.

As the US stock markets continue to fluctuate, business leaders have warned that the threat of a recession remains higher than before the tariffs were first announced.

“Recession risk is much, much higher now than it was a couple [of] weeks ago,” said Adam Hetts, global head of multi-asset at Janus Henderson.

BlackRock chief executive Larry Fink told CNBC there would be a widespread economic slowdown.

“I think we’re very close, if not in, a recession now,” Fink said.

Business and Money Editor Karl Matchett has taken a look at the US stock markets shortly after they opened:

The S&P 500 has jumped up and down sharply in the opening hour of trading, above and below the flat line, but it’s now down 0.8 per cent – with the Dow Industrial similar and the Nasdaq 0.9 per cent down.

The markets opened after China announced it was retaliating to higher US tariffs by raising its levies on American goods to 125 per cent.

Individually, there are some bigger falls on the board already: Tesla has dropped to more than 2.5 per cent in the red, Workiva is down three per cent and Bank of America is down 1.6 per cent.

But Microsoft, Apple and Nvidia, as other examples, are all flat or even slightly up – 1.25 per cent up, in the case of the latter, so it’s far from the across-the-board drop we’ve seen on other days. So far, at least.

The World Trade Organisation’s chief economist says tariffs can have “wide-ranging, and often unintended, consequences”.

Ralph Ossa said tariffs are seemingly simple: they are a tax on imported goods. So a 10 per cent tariff on a product with a world price of $50 would become $55 in the domestic market, with the $5 collected as tax revenue by the local government.

However, he said these taxes can have ripple effects throughout the economy, “altering prices, wages, exchange rates and trade patterns”.

As tariffs return to the trade policy agenda, it is worth recalling what economics has long understood: tariffs are not just a tool for raising revenue or protecting domestic industries – they are a policy lever with wide-ranging, and often unintended, consequences,” he said in analysis for the WTO.

“Their appeal in the short term can obscure longer-term costs to inflation, competitiveness and international cooperation. In a world of growing trade tensions, a clear-eyed view of those trade-offs is more important than ever.”

The US president might have delayed the most aggressive parts of his sweeping tariff hikes, but leading economists and analysts say the risk of a global recession has not gone away.

Economist Pau S Pujolas – who accused the US government of misinterpreting his work earlier this week – said that even if Donald Trump decides not to reintroduce the high tariffs, the global economic risk remains “until either Trump stops playing the tariff game, or Congress removes the power vested on the President”.

“Yes, the damage is done. Global value chains are suffering with all the recklessness, uncertainty is a good friend of recession,” he told The Independent.

Dan Coatsworth, investment analyst at AJ Bell, said the past week of uncertainty alone could have had “a major negative impact on spending” and hurt economies, but that uncertainty was continuing.

“The risk of a global recession remains high until there is more clarity on tariffs longer term,” he said.

US President Donald Trump said he had been watching the bond market before deciding on a U-turn on his aggressive tariff hikes.

“The bond market is very tricky, I was watching it. But yeah, I saw last night where people were getting a little queasy,” he said, announcing a 90-day pause.

Data Correspondent Alicja Hagopian has looked at why bond market turmoil spelt serious trouble, not just for Mr Trump, but for the world:

Donald Trump’s dramatic row back on tariffs has echoes of Liz Truss’s downfall – but will the market turmoil affect his future in the White House?

Donald Trump has defended his tariff policies.

Posting on his Truth Social, the US President said: “We are doing really well on our TARIFF POLICY.”

“Very exciting for America, and the World!!! It is moving along quickly,” he wrote.

China’s Foreign Ministry spokesperson Mao Ning has been quoting Chairman Mao on social media showing the strength of anti-US sentiment after the tariffs.

She posted a black-and-white clip taken during the Korean War when Mao told the US that “no matter how long this war lasts we will never yield”.

Ning added her own comments: “We are Chinese. We are not afraid of provocations. We won’t back down.”

In another post, she quoted Mao calling America a “paper tiger”.