Egypt Daily News – China has escalated its trade rhetoric toward the United States by increasing tariffs on American goods to 84%, marking a new escalation in the ongoing trade war between the two countries.
Following China’s announcement of its latest retaliatory measures against U.S. tariffs, global markets continued to face pressure from fears of the trade war’s repercussions, with futures contracts for the Nasdaq 100 and S&P 500 indexes falling by 1.4% and 1.7% respectively.
In Europe, the Stoxx Europe 600 index dropped by nearly 4%, along with a decline in European stock markets. Oil prices also resumed their decline, reaching their lowest levels in nearly four years, with Brent crude falling below $60 per barrel for the first time since 2021, and West Texas crude dropping to $56, as traders reassessed their energy demand expectations amid the escalating trade war.
The Bloomberg Dollar Index fell by 0.5%, and the euro’s exchange rate rose above $1.10.
Amid the intensifying global trade war and the plummeting markets, safe-haven assets saw a rise, led by gold, which added 3% to its value, reaching around $3,079 per ounce, approaching its historical high of $3,167.84 per ounce set last week.
Investors flocked to gold in search of safety, amid concerns that a global trade war could lead to an economic recession. Additionally, investors turned to the yen and the Swiss franc as safe-haven assets. Gold prices rose on Wednesday as traders sought refuge following the intensifying tariff war between the U.S. and China, with the weakness of the dollar and increasing expectations of a potential U.S. interest rate cut providing additional support.
Gold rose by 2.2% in spot transactions, reaching $3,048 per ounce. Futures contracts for gold for June delivery in the U.S. rose by 3.2%, recording $3,087.
Beijing escalated its trade rhetoric today by raising tariffs on American goods to 84%, which is seen as a new intensification of the ongoing trade conflict between the two largest economies in the world. This raised fears of a global recession and ignited investor appetite for hedging through gold.
The new U.S. tariffs, imposed by the Trump administration, came into effect, including “reciprocal” tariffs of 104% on imports from China, further intensifying trade tensions and pushing the dollar down by 0.4%, which increased the attractiveness of gold priced in dollars for buyers outside the United States.
The European Union has entered the trade war by imposing tariffs on U.S. goods worth around €21 billion ($23.2 billion), in response to the 25% tariffs imposed by President Donald Trump last month on EU exports of steel and aluminum. A majority of the 27 EU member states voted on Wednesday to approve the sanctions, which will take effect in mid-April.
The tariffs will target politically significant U.S. states, including products like soybeans from Louisiana, the home state of House Speaker Mike Johnson, as well as diamonds, agricultural products, poultry, and motorcycles.
Despite China’s and Europe’s responses to tariffs, U.S. stock indices managed to rise at the beginning of Wednesday’s trading, following Trump’s remarks urging buying, as trade tensions escalated after both China and the EU imposed tariffs on U.S. imports.
The S&P 500 index rose by 0.49%, while the tech-heavy Nasdaq 100 gained 1.2%, and the Dow Jones Industrial Average added 0.2%.
This came after President Donald Trump urged Americans on Wednesday to remain calm, continue investing, and not panic, despite the broad reciprocal tariffs, signaling that the White House is closely monitoring the market’s response to the tariffs.
Trump wrote on his social media account: “This is the perfect time to buy.” He also encouraged his followers to “stay calm” and predicted that “everything will be fine.”
