Stock markets around the world tumbled yesterday after Donald Trump announced steep tariffs on £43billion of Chinese imports – sparking fears of a global trade war.
The US President unveiled a punishing array of measures to target China’s £266billion surplus with America, hitting everything from robots to rail equipment.
On Wall Street, the Dow Jones Industrial Average fell nearly 3 per cent, closing down 724.42 points at 23,957.89 in a brutal sell off.
A total of £22.2billion was wiped off the FTSE 100 alone, which closed down 1.2 per cent, or 86.38 points, at 6952.59. Germany’s Dax dropped 1.7 per cent, the Cac in France fell 1.4 per cent and the Euro Stoxx index of the eurozone’s biggest firms fell 1.7 per cent.
US President Domnald Trump prepares to sign a memorandum on intellectual property tariffs on high-tech goods from China
The falls came despite a last-minute reprieve for the European Union as the US charges shied away from tariffs on steel and aluminium.
American trade representative Robert Lighthizer announced the bloc would be spared along with Canada, Mexico, Australia, Brazil and Argentina, just hours before the new tariffs came into force for everywhere else.
rump said it was ‘the first of many’ actions. He has also ordered officials at the World Trade Organisation to clamp down on Chinese technology licensing rules, and attacked China for stealing rivals’ intellectual property.
He argued that forcing China to play fair will boost American businesses, saying: ‘It’s going to make us a much stronger, richer nation.’
But many economists disagree, warning a trade war will make everyone poorer.
China has previously pledged to take all necessary measures to defend its interests.
Mike Jakeman of the Economist Intelligence Unit said: ‘There is a lot riding on China’s response. The US is gambling that any response will be proportionate.
‘China could hit the US hard in return, by making access to the local market harder for US farmers, for example.
‘This is a high-risk strategy for the US administration and one that is likely to weaken, rather than strengthen, the global economy.’
The White House is drawing up a list of products that will face tariffs and expects to release it in the next 15 days.
It aims to hit ten sectors which are being championed by Beijing as part of its ‘Made in China 2025’ plan. They include aerospace, robotics, electric vehicles and pharmaceuticals.