PALM BEACH, Florida/BEIJING/WASHINGTON, April 4 (Reuters) – Global stock markets plummeted further on Friday after China said it would strike back at U.S. President Donald Trump with additional tariffs of 34% on U.S. goods, escalating a trade war that has rattled investors and fed fears of a coming recession.
Intensifying the standoff between the world’s two biggest economies, Beijing also announced controls on exports of some rare earths, while Trump doubled down as well, vowing not to change course.
China added 11 U.S. bodies to the “unreliable entity” list, which allows Beijing to take punitive actions against foreign entities, including firms linked to arms sales to democratically governed Taiwan, which China claims as part of its territory.
Other impacted nations like Canada have also readied retaliation in a mounting trade war after Trump raised U.S. tariff barriers to the highest levels in more than a century, leading to a plunge in world financial markets.
Cruz, however, was given an opportunity earlier this week to register his opposition to Trump’s trade policies when the U.S. Senate passed legislation that would terminate new tariffs on Canada. Cruz voted in the minority to stand with the president.
As the market selloff intensified, Trump was largely out of public view at his golf course, where he sent multiple defiant social media messages guaranteeing victory for the U.S. economy.
After returning to his Florida Mar-a-Lago residence shortly before 4 p.m., White House staff told press not to expect Trump to make any public appearances for the remainder of the day.
Federal Reserve Chair Jerome Powell told a business journalists conference on Friday the tariffs were “larger than expected” and elevated the risk of both higher inflation and slower growth.
The Fed can wait for more data to decide how monetary policy should respond, but it will focus on keeping inflation expectations anchored if Trump’s tariffs sparked more persistent price pressures, Powell said.
He did not directly address the U.S. stocks selloff but acknowledged that uncertainty had paused business decisions.
“People are just, they just are kind of waiting for clarity,” Powell said. “I can’t tell you when that will pass, but you know, ultimately it will pass.”
Just before Powell spoke, Trump said in a Truth Social post that it was the “perfect time” for the Fed to cut interest rates. “CUT INTEREST RATES, JEROME, AND STOP PLAYING POLITICS!” Trump wrote.
