Markets catch sparks fanned by raging trade war

EQUITY markets tumbled yesterday after Donald Trump delivered a “haymaker” blow with sweeping tariffs against US partners and rivals, fanning a global trade war that many fear will spark recessions and ramp up inflation.

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Tokyo’s Nikkei briefly collapsed more than four percent, while US futures plunged and oil prices saw seven-year highs hit a record high, and the dollar retreated amid worries retaliatory measures will batter economies.

The panic came after the US president unveiled a blitz of harsher-than-expected levies aimed at countries he said had been “ripping off” the US for years.

Against a backdrop of US flags, Trump said that “for decades, our country has been looted, pillaged, raped and plundered by nations near and far, both friend and foe alike”.

The measures included a 34% tariff on rival China, 20% on key ally the EU and 24% on Japan.

A number of others will face specifically tailored tariff levels, and for the rest, Trump said he would impose a “baseline” tariff of 10%. Auto tariffs of 25% meanwhile kicked in yesterday.

Investors are bracing for retaliatory measures, with governments making their anger clear.

China vowed “countermeasures” and urged Washington to cancel the tariffs, while calling for dialogue.

Japan said the move was “extremely regrettable” and could contravene World Trade Organization rules, while Taiwan described the levies as “highly unreasonable”.