Donald Trump’s trade tariffs on what he calls “the worst offenders” come into effect at 5am UK time, with China facing by far the biggest levy.

The US will hit Chinese imports with 104% tariffs, marking a significant trade escalation between the world’s two largest superpowers.

At a briefing on Tuesday, White House press secretary Karoline Leavitt said Donald Trump “believes that China wants to make a deal with the US,” before saying: “It was a mistake for China to retaliate.

“When America is punched, he punches back harder.”

After Mr Trump announced sweeping levies last week – hitting some imported goods from China with 34% tariffs – Beijing officials responded with like-for-like measures.

The US president then piled on an extra 50% levy on China, taking the total to 104% unless it withdrew its retaliatory 34% tariff.

China’s commerce ministry said in turn that it would “fight to the end”, and its foreign ministry accused the US of “economic bullying” and “destabilising” the world’s economies.

‘Worst offender’ tariffs also in effect

Alongside China’s 104% tariff, roughly 60 countries – dubbed by the US president as the “worst offenders” – will also see levies come into effect today.

The EU will be hit with 20% tariffs, while countries like Vietnam and Cambodia see a 46% levy and 49% rate respectively.

The UK was not included on this list, and instead saw a “baseline”, worldwide 10% tariff on imported goods in effect from last Saturday.

At the weekend, Sir Keir Starmer promised the government was ready to “shelter British businesses from the storm”.

Since the tariffs were announced last Wednesday, global stock markets have plummeted, with four days of steep losses for all three of the US’ major indexes.

As trading closed on Tuesday evening, the S&P 500 lost 1.49%, the Nasdaq Composite fell 2.15%, and the Dow Jones Industrial Average dropped 0.84%.

According to LSEG data, S&P 500 companies have lost $5.8tn (£4.5tn) in stock market value since last Wednesday, the deepest four-day loss since the benchmark was created in the 1950s.

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Trump signs coal orders

Meanwhile, the US president signed four executive orders to boost American coal mining and production.

The directives order:
• keeping some coal plants that were set for retirement open;
• directing the interior secretary to “acknowledge the end” of an Obama-era moratorium that paused coal leasing on federal lands;
• requiring federal agencies to rescind policies transitioning the US away from coal production, and;
• directing the Department of Energy and other federal agencies to assess how coal energy can meet rising demand from artificial intelligence.

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At a White House ceremony, Mr Trump said the orders end his predecessor Joe Biden’s “war on beautiful clean coal,” and miners “will be put back to work”.

The severity cannot be overstated, if an additional 50% tariffs are levied on all Chinese goods it will decimate trade between the world’s two biggest economies.

Remember, 50% would sit on top of what is already on the table: 34% announced last week, 20% announced at the start of US President Donald Trump’s term, and some additional tariffs left over from his first term in office.

In total, it means all Chinese goods would face tariffs of over 100%, some as high as 120%.

It’s a price that makes any trade almost impossible.

China is really the only nation in the world at the moment that is choosing to take a stand.

While others are publicly making concessions and sending delegations to negotiate, China has clearly calculated that not being seen to be bullied is worth the cost that retaliation will bring.

The real question, though, is if the US does indeed impose this extra 50% tomorrow, what could or would China do next?

It has said it will “fight to the end”, but what does that mean?

In reality, there are few good options.

There are some obvious measures that China will almost certainly enact.

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Further export controls on rare earth minerals (crucial for the development of high-tech products) are one example. China controls a huge proportion of the world’s supply, but the US would likely find workarounds in time.

Hiking tariffs on high-impact US products such as agricultural goods is another option, but there is only so far this could go.

The potentially more impactful options have significant drawbacks for Beijing.

It could, for instance, target high-profile American companies such as Apple and Tesla, but this isn’t ideal at a time when China is trying to attract more foreign investment, and some devaluation of the currency is possible, but it would also come with adverse effects.

Other options are more political and come with the risk of escalation beyond the economic arena.

In an opinion piece this morning, the editor of Xinhua, China’s state news agency, speculated that China could cease all cooperation with the US on the war against fentanyl.

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This has been a major political issue for Mr Trump, and it’s hard to see it would not constitute some sort of red line for him.

Other options touted include banning the import of American films, or perhaps calling for the Chinese public to boycott all American products.

Anything like this comes with a sense that the world’s two most powerful superpowers might be teetering on the edge of not just a total economic decoupling, but cultural separation too.

There is understandably serious nervousness about how that could spiral and the precedent it sets.

A rumour on social media fuelled a brief upturn for struggling US stock markets – but they swiftly swung back down again after the claim was debunked by the White House.

Markets around the world have struggled since some of Donald Trump’s new import tariffs came into effect over the weekend.

Tariffs latest: Starmer sets out response to US levies

The US markets opened on Monday with a fall for the third day in a row but briefly rallied and showed growth of over 2% at 3.15pm UK time.

The upturn came after a social media rumour claimed a top Trump administration adviser had suggested the president could be considering a 90-day pause on tariffs.

The origin of the false report was unclear but it appeared to be a misinterpretation of a comment made by a White House employee during a Fox News interview.

Asked if the US president would consider a pause, Kevin Hassett, White House National Economic Council director, said: “I think the president is going to decide what the president is going to decide.

“There are more than 50 countries in negotiation with the president.”

Nearly two hours later, multiple X accounts posted identical messages claiming Mr Hassett said a pause – for all countries except China – was being considered.

The identical posts were picked up by some news outlets and stock traders, sending the markets skyrocketing.

However, when the White House said any talk of a pause was “fake news”, they were sent back into the red.

Mr Trump has remained defiant despite fears that his levies could be pushing the US towards a recession.

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The US president has insisted the taxes are necessary for rebuilding domestic manufacturing and resetting trade relationships with other countries.

“Be Strong, Courageous, and Patient, and GREATNESS will be the result!” he wrote on Truth Social on Monday.

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Mr Trump – who played golf in Florida over the weekend – has also threatened an extra tariff on China, after Beijing announced a retaliatory levy on the US.

He said if Beijing does not withdraw its retaliatory tax, the US will impose an additional 50% levy on China and “negotiations with other countries, which have also requested meetings, will begin taking place immediately”.