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China announces 34% additional tariffs

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Sharp escalation in global trade war

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Trump says his policies will not change

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Rubio disputes talk of economies crashing

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EU's top trade negotiator to speak to U.S. officials on

Friday

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Stock markets around the world keep falling, banks hit

hard

By Trevor Hunnicutt, Mei Mei Chu and Susan Heavey

PALM BEACH, Florida/BEIJING/WASHINGTON, April 4

(Reuters) - C hina announced additional tariffs of 34% on U.S.

goods on Friday, striking back at U.S. President Donald Trump

and escalating a trade war that has fed fears of a recession and

triggered a global stock market rout that showed no sign of

slowing on Friday.

In 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 their highest level in more than a century,

leading to a plunge in world financial markets.

Investment bank J.P. Morgan said it now sees a 60% chance of

the global economy entering recession by year-end, up from 40%

previously.

Wall Street fell sharply on Friday morning, after China

announced its retaliatory tariffs a day after the Trump

administration's sweeping levies knocked off $2.4 trillion from

U.S. equities.

Shares of big tech stocks fell, helping to drive the Nasdaq

toward a bear market. Companies with big exposure to China and

Taiwan for manufacturing their products were hard-hit, with

Apple ( AAPL ) down 4.7% and Nvidia ( NVDA ) down 3.4%.

The Nasdaq showed a 3.69% decline, bringing the index to

20% below its all-time closing high in December.

"This is significant and is unlikely to be over, hence the

negative market reactions," said Stephane Ekolo, Market & Equity

Strategist, Tradition, London. "Investors are afraid of a 'tit

for tat' trade war situation."

Federal Reserve Chair Jerome Powell said on Friday that the

tariffs were "larger than expected" and elevated the risk of

both higher inflation and slower growth.

In prepared remarks at a conference, Powell did not address

the swoon in U.S. stocks directly but acknowledged that the same

uncertainty engulfing investors and company executives was

facing the Fed.

GLOBAL EFFECTS

Trump's team has played down the market turbulence as an

adjustment that would prove beneficial in the long run. The

White House touted stronger-than-expected job data on Friday,

after a Labor Department report showed the U.S. economy added

far more jobs in March than predicted.

But Trump's sweeping import tariffs could test the labor

market's resilience in the months ahead amid sagging business

confidence.

"To the many investors coming into the United States and

investing massive amounts of money, my policies will never

change. This is a great time to get rich, richer than ever

before!!!" Trump said in a social media post in all caps.

After Beijing's retaliation, he posted: "China played it

wrong, they panicked - the one thing they cannot afford to do!"

Trump on Thursday had said he was open to talking to China

and making a deal over TikTok by providing relief for U.S.

tariffs on Chinese goods in exchange for Beijing's approval of

the sale of the ByteDance-owned short video app.

Speaking to reporters on Air Force One, Trump said it was

just an example and did not answer a question on whether plans

were underway for him to talk to Chinese President Xi Jinping.

In contrast to the U.S. labor report, Canada's

total employment fell

and the unemployment rate ticked up in March, data showed

on Friday. The country's first monthly decrease in jobs since

2022 was prompted by uncertainty around tariffs, which forced

companies to pause hiring and spurred some layoffs.

In Japan, one of United States' top trading partners, Prime

Minister Shigeru Ishiba said the tariffs had created a "national

crisis" as a plunge in banking shares on Friday set Tokyo's

stock market on course for its worst week in years.

U.S. Secretary of State Marco Rubio on Friday disputed any

economic crash, telling reporters that markets were reacting to

the change and would adjust.

"Their economies are not crashing. Their markets are

reacting to a dramatic change in the global order in terms of

trade," he said at a press conference in Brussels. "The markets

will adjust."

DIVISIONS AND MIXED SIGNALS

With European shares also tumbling to the biggest weekly

losses in years, the European Union's trade commissioner Maros

Sefcovic will speak to U.S. counterparts.

"We will not shoot from the hip - we want to give

negotiations every chance to succeed to find a fair deal, to the

benefit of both sides," he said on social media.

The EU is divided on how best to respond to Trump's tariffs.

Countries that are cautious about retaliating and thereby

raising the stakes in the standoff with the U.S. include

Ireland, Italy, Poland and the Scandinavian nations.

French President Emmanuel Macron led the charge on Thursday

by calling on companies to freeze investment in the U.S.

However, French Finance Minister Eric Lombard later

cautioned against like-for-like countermeasures on the U.S.

tariffs, warning this would also rebound on European consumers.

The U.S. tariffs could jack up the price for U.S. shoppers

of everything from cannabis to running shoes to Apple's ( AAPL ) iPhone.

A high-end iPhone could cost nearly $2,300 if Apple ( AAPL ) passes the

costs on to consumers, based on projections from Rosenblatt

Securities.

China is retaliating for Trump's tariffs on imports from the

world's No. 2 economy. The European Union faces a 20% duty.

Trump says "reciprocal" tariffs are a response to barriers

put on U.S. goods, while administration officials said the

tariffs would create manufacturing jobs at home and open up

export markets abroad, although they cautioned it would take

time to see results.