Market panic deepens as China retaliates against Trump tariffs

World markets crashed on Monday with Asia leading the rout, as US President Donald Trump held firm on his swingeing tariffs despite China retaliating and global recession warnings growing louder.

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Hong Kong’s Hang Seng plunged more than 13 percent, its biggest drop since the 1997 Asian financial crisis, while in Japan the Nikkei 225 index 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 two biggest economies.

Beijing’s new 34-percent tariffs announced on Friday “are aimed at bringing the United States back onto the right track of the multilateral trade system,” 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.

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,” Trump said on Sunday.

He told reporters aboard Air Force One that world leaders are “dying to make a deal”.