Trump Threatens Extra 50% Tariff on China as Panic Grips Markets

FTSE 100 closes down by more than 4% amid global recession fears

- Callum Jones Washington Anna Betts New York

Donald Trump has threatened to hit China with new and steeper tariffs in a further escalation of a damaging trade war that has caused panic across global stock markets.

On another volatile day of big losses across markets in Europe and Asia, the US president doubled down on Beijing - vowing to increase tariffs on Chinese exports by a further 50% if it retaliates against the tariffs his administration is due to introduce from tomorrow.

The threat drew a sharp line under tentative hopes that Trump might reconsider the plan, instead exacerbating the trade spat between the world's two largest economies and heightening fears of a global recession.

Wall Street executives, including some who backed the president's campaign to win back the White House last year, have urged him to think again on his tariffs policy.

Major equity markets continued to fall for a third day yesterday, after the US imposed a blanket 10% tariff on imported goods over the weekend, on countries including the UK. It is due to follow with higher tariffs on products from specific markets-including 20% on the European Union and 34% on China - from tomorrow.

Before the latest tariff threat, a renewed market sell-off that began in Asia spread to Europe, and reached the US when Wall Street opened.

Hong Kong's Hang Seng index plunged more than 13%, while the Nikkei 225 slumped 7.8% in Tokyo.

In London the FTSE 100 closed down 4.38% at 7,702.08, its lowest close in more than a year, while Germany's DAX and France's CAC were also down more than 4%.

On Wall Street, the benchmark S&P 500 dropped by as much as 4.1%, before launching an extraordinary reversal to turn positive.

In a chaotic few minutes of trading at one point during the day, confusion spread over an interview given by one of Trump's officials that sparked hopes of a tariffs reprieve.