China's Tariff Retaliation Sparks Global Market Turmoil

China has announced a 34% tariff on U.S. goods, in response to President Trump's recent tariffs. This escalation has caused global stock markets to decline and fueled fears of a recession. Economists suggest two possible paths: negotiation or prolonged tariffs, which could further impact growth and markets.

China has imposed a 34% tariff on U.S. goods, retaliating against President Donald Trump's latest tariffs, which have intensified recession fears and triggered a global stock market decline. On Friday, global stocks fell for a second consecutive day, with banking stocks significantly affected as investors worried about economic growth and anticipated further central bank rate cuts. The benchmark 10-year U.S. Treasury yields dropped below 4%.

Samy Chaar, Chief Economist at Lombard Odier in Geneva, commented that it's too early for a definitive assessment, noting two potential outcomes: Trump could show openness to negotiations, leading to reduced tariffs in future months, or he could maintain tariffs long-term, disrupting economic stability.

Eddie Kennedy, Head of Bespoke Discretionary Fund Management at Marlborough in London, suggested that others might have learned from Trump's previous term, choosing now to push back, potentially escalating the situation and affecting consumers. Jan von Gerich, Chief Market Strategist at Nordea in Helsinki, warned that the stronger-than-expected reaction from China could lead to further market sell-offs if Trump retaliates.

(With inputs from agencies.)