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Global financial markets tumbled on Monday after President Donald
Trump warned foreign nations they’d need to pay “a lot of money” to lift the sweeping tariffs he called "medicine," while U.S. stocks got a brief lift on hints of a pause, only to slide again.
Asian and European shares plunged and oil prices plummeted as investors feared the duties Trump announced last week could lead to higher prices, weaker demand and potentially a global recession.
U.S. stocks initially tumbled as well, then rebounded after White House adviser Kevin Hassett said, according to CNBC, that Trump was considering a 90-day pause in tariffs for all countries except China. Stocks then slid again after the broadcaster cited the White House as saying the pause comment was "fake news."
The European Union, which has been divided on how strongly to punch back against Washington without risking more pain for its own companies and consumers, said it wanted to negotiate but was also ready to retaliate.
European Commission President Ursula von der Leyen said the EU had offered Trump "zero-for-zero" tariffs on industrial goods.
Goldman Sachs raised the odds of a U.S. recession to 45% in the next 12 months, joining other investment banks in revising their forecast. JPMorgan economists now estimate the tariffs pushing the U.S. economy into a 0.3% contraction, down from an earlier estimate of 1.3% growth of gross domestic product.
"People are afraid the worst is yet to come. They're worried about a market crash," said Robert Pavlik, senior portfolio manager at Dakota Wealth Management in Connecticut.
"They're worried about what follows – a recession here domestically and then globally, leading to a possible depression."
Threat of new tariffs on China
Trump showed no sign of relaxing his tariff policy on Monday.
"Be Strong, Courageous, and Patient, and GREATNESS will be the result!" he wrote on Truth Social, his social media platform.
Trump accused other countries of "taking advantage of the Good OL' USA!" on international trade and said "our past 'leaders' are to blame for allowing this, and so much else, to happen to our Country."
"MAKE AMERICA GREAT AGAIN!"
Trump has insisted his tariffs are necessary to rebalance global trade and rebuild domestic manufacturing. He has singled out China as "the biggest abuser of them all," blasting Beijing for increasing its own tariffs in retaliation.
Later on Monday, he threatened to impose an additional 50% tariff on China effective Wednesday if Beijing does not withdraw its retaliatory tariffs.
"If China does not withdraw its 34% increase above their already long term trading abuses by tomorrow, April 8th, 2025, the United States will impose ADDITIONAL Tariffs on China of 50%, effective April 9th," he wrote on Truth Social.
"Additionally, all talks with China concerning their requested meetings with us will be terminated! Negotiations with other countries, which have also requested meetings, will begin taking place immediately."
Earlier, he also repeated a call for the U.S. Federal Reserve (Fed) to cut interest rates.
"The United States has a chance to do something that should have been done DECADES AGO. Don’t be Weak! Don’t be Stupid!" Trump wrote.
On Friday, Fed Chair Jerome Powell warned that the tariffs could increase inflation, and he said "there's a lot of waiting and seeing going on, including by us," before any decisions would be made.
Speaking to reporters earlier aboard Air Force One on Sunday, Trump had brushed off losses that have wiped out trillions of dollars from world stock markets.
"I don't want anything to go down. But sometimes you have to take medicine to fix something," he said as he returned from a weekend of golf in Florida.
'Nuclear' winter
As Trump's circle hit back at critics, White House trade adviser Peter Navarro said talk of a recession was "silly."
Hassett, director of the National Economic Council, said separately that Trump had talked to world leaders all weekend and would listen to proposals for great deals.
"He's doubling down on something that he knows works, and he's going to continue to do that," he 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."
Trump also said he had spoken to leaders from Europe and Asia over the weekend, who hope to convince him to lower tariffs as high as 50% due to take effect this week. The baseline 10% tax took effect on Saturday.
They want to talk, but there's no talk unless they pay us a lot of money on a yearly basis," Trump said.
The tariff announcement has met with bewildered condemnation from other leaders and triggered retaliatory levies from China, the world's No.2 economy, which called Trump's behavior "economic bullying."
After stocks in mainland China and Hong Kong cratered on Monday, China's sovereign fund stepped in to try to stabilize the market.
Shares in Taiwan plummeted almost 10% – the biggest one-day percentage fall on record.
Wall Street leaders issued warnings on U.S. 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."
They were joined by British billionaire Richard Branson, who also weighed in on the economic uncertainty, urging Trump to admit he made an error.
Elon Musk, the world's richest man and a close ally of Trump in a crusade to cut government spending, said on Saturday that he hoped to see zero tariffs between the U.S. and Europe. On Monday, he posted on social media a video of economist Milton Friedman extolling the virtues of the international trading system.
Tactics, or new regime?
that he hoped to see zero tariffs between the U.S. and Europe. On Monday, he posted on social media a video of economist Milton Friedman extolling the virtues of the international trading system.
Tactics, or new regime?
Investors and political leaders have struggled to determine whether Trump's tariffs are part of a permanent new regime or a negotiating tactic to win concessions from other countries.
"We stand ready to negotiate with the U.S. Indeed, we have offered zero-for-zero tariffs for industrial goods as we have successfully done with many other trading partners," said the EU's von der Leyen.
The 27-nation bloc faces 25% import tariffs on steel and aluminum and cars and "reciprocal" tariffs of 20% from Wednesday for almost all other goods.
Some in the EU worry that a forceful response risks even more blowback on European exporters of everything from French Cognac and Italian wine to German cars.
"We need to remain calm and respond in a way that de-escalates. The stock markets right now show what will happen if we escalate straightaway. But we will be prepared to take countermeasures if needed to get the Americans at the table," Dutch Trade Minister Reinette Klever told reporters.
Germany's Friedrich Merz, who is set to take charge of Europe's largest economy within weeks, told Reuters that the market turmoil underscored the need for his country to regain competitiveness. He called for tax cuts and lower energy prices.
In a sign that companies in Germany and elsewhere are grappling with the fallout, Volkswagen's Audi is holding back cars that arrived in U.S. ports after April 2 because of the newly imposed 25% auto tariff.
Aircraft parts supplier Howmet Aerospace may halt some shipments if they are impacted by tariffs, according to a letter seen by Reuters.
Prime Minister Shigeru Ishiba of Japan, one of Washington's closest allies in Asia, said on Monday he told Trump in a telephone call that his tariff policies were extremely disappointing and urged him to rethink.
"I've told the President that Japan has been the biggest investor in the United States for five straight years and the tariff policies could hurt Japanese companies' investment capabilities," Ishiba told reporters after the call.
During the 25-minute call, the two leaders agreed to continue constructive dialogue on the issue and to appoint ministers in charge of the discussions, Ishiba said.
Meanwhile, Trump mentioned the call in a post on Truth, emphasizing that the tariff parameters being set are "tough but fair."
Ishiba "is sending a top team to negotiate," Trump said in the post.
"They have treated the U.S. very poorly on Trade. They don't take our cars, but we take MILLIONS of theirs. Likewise Agriculture, and many other 'things'," he said.
Mexico's President Claudia Sheinbaum on Monday said Mexico wants to avoid putting
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