The European Commission President has called for China to ensure a negotiated solution to problems caused by the sweeping import tariffs imposed by US President Donald Trump.
In a phone call with China’s Prime Minister Li Qiang, Usrula von der Leyen “stressed the responsibility of Europe and China, as two of world’s largest markets, to support a strong reformed trading system, free, fair and founded on a level playing field,” her office said in a statement.
Both leaders discussed setting up a mechanism to track possible trade diversion caused by the tariffs, Ms von der Leyen’s office said, as the EU fears China will redirect cheap exports from the US to Europe.
The call came after China vowed to “fight to the end” against fresh tariffs of 50% threatened by Mr Trump, further aggravating a trade war that has already wiped trillions off global markets.
Mr Trump upended the world economy last week with sweeping tariffs that have raised the spectre of an international recession, but has ruled out any pause in his aggressive trade policy despite a dramatic market sell-off.
China – the United States’ major economic rival – responded by announcing its own 34% duties on US goods to come into effect on Thursday, in a showdown between the world’s two biggest economies.
The swift retaliation from China earned a new warning from Mr Trump that he would impose additional levies if China refused to stop pushing back against his barrage of tariffs – driving the overall levies on Chinese goods to 104%.
“I have great respect for China but they can not do this,” Mr Trump said in the White House.
“We are going to have one shot at this… I’ll tell you what, it is an honour to do it.”
In a statement, China’s commerce ministry said: “The US side’s threat to escalate tariffs against China is a mistake on top of a mistake, once again exposing the American side’s blackmailing nature.”
“If the US insists on having its way, China will fight to the end,” it added.
The European Union proposed counter-tariffs of its own to Mr Trump’s tariff onslaught that swept up dozens of countries, sent financial markets into a tailspin and fuelled expectations that the global economy may be headed for recession.
Firmer start for Asian markets
Financial markets appeared to find a firmer footing after a gut-wrenching few days for investors which prompted some business leaders, including those close to Mr Trump, to urge the president to reverse course.
Japan’s Nikkei index rose 6%, rebounding from a 1-1/2-year low hit in the previous session, after Mr Trump and Japan Prime Minister Shigeru Ishiba agreed to open trade talks in a phone call late yesterday.
Chinese blue-chips climbed 0.7%, recouping a fraction of the more than 7% slide.
Hong Kong’s Hang Seng Index jumped 2% after suffering the worst day since 1997.
US stock futures also pointed higher after a rollercoaster session in which it touched its lowest level in more than a year.
Mr Trump said the tariffs – a minimum of 10% for all US imports, with targeted rates of up to 50% – would help the United States recapture an industrial base that he says has withered over decades of trade liberalisation.
“It’s the only chance our country will have to reset the table. Because no other president would be willing to do what I’m doing, or to even go through it,” he told reporters at the White House.
The European Commission, meanwhile, proposed counter-tariffs of 25% on a range of US goods, including soybeans, nuts and sausages, though other potential items like bourbon whiskey were left off the list, according to a document seen by Reuters.
Officials said they stood ready to negotiate a “zero for zero” deal with Mr Trump’s administration.
“Sooner or later, we will sit at the negotiation table with the US and find a mutually acceptable compromise,” EU Trade Commissioner Maroš Šefčovič said at a news conference.
The bloc is struggling with tariffs on autos and metals already in place, and faces a 20% tariff on other products. Mr Trump has also threatened to slap tariffs on EU alcoholic drinks.
Investors and political leaders have struggled to determine whether Mr Trump’s tariffs are permanent or a pressure tactic to win concessions from other countries.
US Treasury Secretary Scott Bessent met with Mr Trump in Florida on Sunday, Politico reported, to urge him to emphasise striking trade deals with partners in order to reassure the markets that there is an endgame to the US strategy.
Administration officials say dozens of other countries have reached out with the hope of heading off the tariffs due to take effect tomorrow.
Mr Trump administration officials say the president is following through on a promise to reverse decades of trade liberalisation that he believes has undercut the US economy.
“He’s doubling down on something that he knows works, and he’s going to continue to do that,” White House economist Kevin Hassett said on Fox News.
“But he is also going to listen to our trading partners, and if they come to us with really great deals that advantage American manufacturing and American farmers, I’m sure he’ll listen,” he added.
Wall Street leaders issued warnings on US tariffs, with JPMorgan Chase CEO Jamie Dimon saying they could have lasting negative consequences, while fund manager Bill Ackman said they could lead to an “economic nuclear winter.”
Mr Ackman is one of a handful of Mr Trump supporters who questioned the strategy.
Billionaire Elon Musk, who is leading Mr Trump’s effort to slash government spending, called for zero tariffs between the US and Europe over the weekend.
Yesterday, Mr Trump trade adviser Peter Navarro dismissed the Tesla CEO as a “car assembler”.
Investors are now betting that the growing risk of recession could prompt the US Federal Reserve to cut rates as early as next month.
Mr Trump repeated his call for the central bank to lower rates yesterday, but Fed chief Jerome Powell has so far indicated he is in no rush.
