Two days after President Trump announced his expansive global tariffs, the United States confronted wide-ranging and painful blowback, as China retaliated against American goods and markets plummeted again on worries of a persistent, damaging trade war.
No portion of the global economy appeared unscathed as the world braced for Mr. Trump to begin imposing his nearly across-the-board taxes on imports Saturday, marking the first salvo in a potentially costly trade conflict that the president has vigorously defended.
China, which Mr. Trump has already hit with 20 percent tariffs, announced plans to retaliate. Beijing promised to impose a 34 percent tariff on American goods next week, including on agricultural products. China calibrated its tariffs to match Mr. Trump’s decision to add a 34 percent tax to Chinese imports.
The tit-for-tat delivered a huge blow to financial markets, as Wall Street reckoned with the rising odds of an escalating global trade standoff. By the closing bell, the S&P 500 had fallen by almost 6 percent, pulling it closer into a bear market, a widely used Wall Street term for a decline of at least 20 percent from its peak. The tech-heavy Nasdaq fell 5.8 percent, pushing it into bear market territory.
As China took aim at the United States, Ngozi Okonjo-Iweala, the director general of the World Trade Organization, warned on Friday against a “cycle of retaliatory measures that lead to further declines in trade.” In the United States, Jerome H. Powell, the chair of the Federal Reserve, struck his own downbeat note over the unpredictable trajectory of the economy.
“While uncertainty remains elevated, it is now becoming clear that the tariff increases will be significantly larger than expected,” Mr. Powell said. “The same is likely to be true of the economic effects, which will include higher inflation and slower growth.”
But Mr. Trump responded to the day of chaos by striking a defiant tone. Having decamped from Washington to Mar-a-Lago, his home in Florida, he declared on Truth Social: “MY POLICIES WILL NEVER CHANGE.”
Instead, the president insisted his strategy was “ALREADY WORKING,” he said in another post, as he held up a newly released and better-than-expected jobs report, which reflected U.S. hiring increased in the month before the announcement of his tariffs.
At one point, the president even circulated another user’s video that argued “Trump is purposely CRASHING the market,” in a bid to force the Fed to lower interest rates. He later called on Mr. Powell to do just that, demanding the independent chair of the central bank “STOP PLAYING POLITICS.”
And Mr. Trump eventually turned his attention to China, attacking the country for having “PLAYED IT WRONG” by retaliating against the United States. The president and his aides previously have signaled they could ratchet up their tariff rates if other nations look to exact retribution on U.S. goods.
The global scramble in many ways underscored the weight of Mr. Trump’s tariffs and the significance of his grand aspirations to recalibrate the global trading system. The White House sees these levies as critical toward resetting U.S. trade relationships, which the president contends are unfair, while boosting U.S. manufacturing and raising new revenue.
But the tariffs, which are taxes on imports, threaten to fall hard on businesses that could face new costs to produce their goods. That, in turn, could hammer consumers, who are likely to shoulder the burden of any price increases. Economists widely believe the result could be a rising rate of inflation, and a slowdown in consumer spending and business investment, which together crimp U.S. growth and push the economy into a recession.
“Markets are expressing a vote of no confidence in the new tariff regime,” said Joe Brusuelas, the principal and chief economist at the consulting firm RSM. He added that Mr. Trump’s commentary on Friday only “adds to the consternation and concern that there’s no strategic road map.”
But Mr. Trump and his top aides have swatted away those dour projections in recent days. Fanning cable news, they have dismissed the ebb and flow of the markets and acknowledged the possibility that tariffs could create short-term economic pain, which the president has likened to a “sick” patient receiving a painful yet necessary medical operation.
The administration and its conservative allies have also labored to deflect criticism from economists, repeatedly portraying them as naysayers who had wrongly judged the president’s agenda in the past.
“I think it’s very clear the rhetoric of the economic community, in particular, is almost entirely ideological and out of proportion to the actual sort of risk-reward calculation,” Oren Cass, the chief economist at American Compass, a conservative economic think tank, said Friday.
Global leaders, American politicians and others rejected that view, saying that Mr. Trump’s approach threatened to weaken the global economy and send prices soaring just as much of the world was finally returning to a sense of balance after two years of rapid inflation.
Ms. Okonjo-Iweala, the director general of the W.T.O., warned in a statement Friday that Mr. Trump’s policies “could lead to an overall contraction of around 1 percent in global merchandise trade volumes this year, representing a downward revision of nearly four percentage points from previous projections.”
The state of California signaled it would try to negotiate its own trade deals, as Gov. Gavin Newsom, a Democrat, looked to protect local agriculture and other businesses. In a statement, Mr. Newsom said the president’s tactics would be felt in “pretty profound ways to real people, including those who voted for Donald Trump and are now being betrayed by this very administration.”
Even video games could not escape the fray: Japan’s Nintendo announced it would delay presales of its widely anticipated upcoming console, the Switch 2, as it cited a need “to assess the potential impact of tariffs and evolving market conditions.” Mr. Trump has said Japan will face a 24 percent tariff on its exports to the United States.
Some foreign governments also mounted a last-minute scramble to figure out how, or if, to retaliate, while trying to persuade Washington to relax its coming taxes on imports.
Maros Sefcovic, the trade commissioner for the European Union, said Friday he had a “frank” exchange with Mr. Trump’s trade emissaries, posting on the social-media site X: “I was clear: US tariffs are damaging, unjustified.”
Earlier Friday, Mr. Trump said he had spoken by phone with To Lam, the general secretary of the Communist Party of Vietnam, which stands to see a 46 percent tariff on its exports to the United States beginning next week. By Mr. Trump’s telling, Vietnam “wants to cut their Tariffs down to ZERO if they are able to make an agreement with the U.S.,” though the president did not explicitly say if he would accept such a deal.
The Trump administration has sent mixed signals over its willingness to cut a deal: Some of Mr. Trump’s advisers have said they do not intend to haggle, but the president himself told reporters earlier in the week that he could be open to negotiation if the United States received something “phenomenal” in return for relaxing tariffs.
Ana Swanson, Laurel Rosenhall, Colby Smith, Zachary Small and Keith Bradsher contributed reporting.
