Trump tariffs dwell: China surprised by JD Vance calling its employees ‘peasants’ as 104% levy comes into drive
China has reacted with shock as the Trump administration called its workers “peasants” and slapped the country with an eye-watering 104 per cent tariff on almost all imports.
Donald Trump’s full list of “reciprocal” tariffs has now come into effect, causing Asian markets to tumble on Wednesday as even the US’s closest allies in the region were hit with hefty new duties.
JD Vance made the insulting “peasants” remark in an interview on Fox News last week, in which he complained that America “borrow[s] money from Chinese peasants to buy the things those Chinese peasants manufacture”.
A Chinese government spokesperson said it was “surprising and sad to hear the vice president say such ignorant and impolite words”.
The escalating trade war between the world’s two largest economies has shaken global markets, prompting a widespread sell-off and rattling investor confidence.
Consumers in the US are likely to be among the hardest-hit, with companies expected to pass on any new import tariffs to their customers. In one Walmart in New Jersey, shoppers were seen stockpiling basic goods like canned food and packets of juice, telling a Reuters reporter it reminded them of Covid-era panic buying.
Chancellor meets top bankers to discuss Trump tariff fallout
The chancellor met chief executives from banking and investment first in the Treasury this morning, vowing to shield “working people” from the impact of Donald Trump’s tariffs.
At the meeting were Lloyds chief executive Charlie Nunn, Hargreaves Lansdown boss Dan Olley and other business leaders.
Ms Reeves promised to build closer ties with non-US allies to boost trade, while Britain seeks to hammer out a deal with the Trump administration to lower or lift tariffs on Britain.
Following the meeting, a Treasury spokesman said: “This morning, the Chancellor and Economic Secretary met with key players across the industry promoting the UK as a place to invest given our stable political climate, our ongoing reforms to our capital markets and our commitment to bolstering the UK’s retail investment culture and delivering growth under our Plan for Change.”
What Asian countries hit hard by Trump’s tariffs are doing to save their economies
“They are dying to make a deal – ‘please sir make a deal, I’ll do anything, I’ll do anything sir’,” he said.
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Reeves says she does not want ‘an escalation of tariffs’
Chancellor Rachel Reeves said she does not want to “see an escalation of tariffs”, after Donald Trump’s worldwide tariffs came into effect.
Speaking to broadcasters, she said: “Trade wars are to the benefit of no-one, and that is why in the UK we are keeping cool heads and remaining pragmatic.
“We will always act in our country’s national interest for jobs and to support British business.
“That’s what we will continue to do whilst we have ongoing discussions with our counterparts in the United States.
“We don’t want to see an escalation of tariffs. We want to do a deal that supports the UK economy.”
Global stability risks rise as US tariffs could weigh on growth, Bank warns
Risks to the stability of the world’s financial system have increased as US tariffs could weigh on global economic growth, the Bank of England has warned.
Households and businesses nonetheless remain resilient and the UK banking system is equipped to support them even through a period of stress, the Bank’s Financial Policy Committee (FPC) said in its latest report.
“The global risk environment has deteriorated and uncertainty has intensified,” the FPC found.
“The probability of adverse events, and the potential severity of their impact, have risen.”
It follows US President Donald Trump announcing a series of new and higher tariffs on all imports to the US, resulting in retaliatory charges including by China.
The major shift in global trade arrangements could “harm financial stability by depressing growth” in the world’s economy, the Bank said.
These risks are “particularly relevant” to the UK because it is an open economy with a large financial sector.
UK household borrowers, like people with a mortgage, and businesses with loans have remained resilient on the whole, according to the FPC.
EU to vote on retaliatory 25 per cent tariffs on US exports
European Union countries are expected to approve on Wednesday the bloc’s first countermeasures against U.S. President Donald Trump’s tariffs, joining China and Canada in retaliating and escalating a conflict that could become a global trade war.
The approval will come on the day that Trump’s “reciprocal” tariffs on the EU and dozens of countries took effect, including massive 104 per cent duties on China, extending his tariff onslaught and spurring more widespread selling across financial markets.
The 27-nation bloc faces 25 per cent import tariffs on steel and aluminium and cars as well as the new broader tariffs of 20 per cent for almost all other goods under Trump’s policy to hit countries he says impose high barriers to U.S. imports.
The European Commission, which coordinates EU trade policy, proposed on Monday extra duties mostly of 25 per cent on a range of U.S. imports in response specifically to the U.S. metals tariffs. It is still assessing how to respond to the car and broader levies.
The imports include motorcycles, poultry, fruit, wood, clothing and dental floss, according to a document seen by Reuters. They totalled about 21 billion euros ($23 billion) last year, meaning the EU’s retaliation will be against goods worth less than the 26 billion euros of EU metals exports hit by U.S. tariffs.
European markets down on Wednesday as turmoil continues
Europe is today pretty much following the path of the FTSE 100, which is down slightly more than two per cent after a couple of hours of trading.
The 250 and the AIM are both down slightly less than that, but each of France’s CAC 40, Germany’s DAX and the Euronext 100 are down between 2.2 and 2.4 per cent on Wednesday morning.
Telecomms, travel and financials all look to be taking the hit across those markets, plus some energy stocks. S&P 500 futures have rebounded from earlier low points to sit flat right now, with Nasdaq futures up 0.4 per cent.
China censors some tariff-related content on social media
China began censoring some tariff-related content on social media on Wednesday after U.S. “reciprocal” tariffs on dozens of countries took effect, including massive 104% duties on Chinese goods, while posts criticising the U.S. were top hits.
Hashtags and searches for “tariff” or “104” were mostly blocked on social media platform Weibo, with pages showing an error message.
Other hashtags, particularly the U.S. having an egg shortage, were amongst the most viewed on Weibo. State broadcaster CCTV started a hashtag “#UShastradewarandaneggshortage.”
The U.S. is “waving the tariff stick in a high profile manner, imposing tariffs on EU steel and aluminium products.. but also writing letters to European countries in a low voice, urgently asking for eggs,” CCTV said in a post on Weibo.
Beijing announced counter-tariffs on the U.S. last week and has vowed to fight what it views as blackmail.
Internet censors have also allowed mocking U.S. comments to proliferate on Chinese social media, depicting the United States as a globally irresponsible trading partner, as China prepares the stage for a wider trade fight with the world’s biggest economy
British banks suffer as prospect of global recession looms
Once again, British banks are taking a battering in the morning markets.
Barclays (-3.6pc), Standard Chartered (-3.6pc), HSBC (-3pc), Lloyds (-2.5pc) and Natwest (-2.5pc) are all suffering – it’s worth noting there’s multiple layers to financials taking a hit.
Firstly, of course, there’s the prospect of a global recession looming; when people have less money to spend and businesses don’t do as well, those who move and lend the money naturally stand to make less of it themselves too.
Secondly, there are growing calls for the Bank of England to make pretty significant cuts to the base interest rate next month, which in turn will squeeze profit margins that banks have been used to over the past year or two.
Lloyds, as an example from those above, is far more domestic-focused than Standard Chartered, so a wider-impacting downturn will affect those international banks more severely and so far at least it appears Asia may be expected to suffer more than the UK too, which partly explains SC being down 26pc over the last month while Lloyds is ‘only’ down 8pc over the same timeframe.
British gilt yields reach highest point since 1998
British long-dated gilt yields have reached their highest point since 1998 while the FTSE 100 slumped in response to President Donald Trump imposing his latest round of tariffs.
The yield on a 30-year UK gilt hit 5.518 per cent on Wednesday morning, up 16 basis points and surpassing a previous 27-year high of 5.472 per cent set in January.
The movement followed on from a sharp rise in 30-year US Treasury yields overnight and comes amid rising bets from investors that the Bank of England will cut rates faster than previously expected this year.
Shorter-dated 10-year gilt yields were slightly higher at 4.69 per cent while two-year yields ticked down at 3.92 per cent.
The FTSE 100 was down 2.47 per cent, or 195 points, at 7,715, on Wednesday morning.
