Donald Trump’s threats of additional trade tariffs against China, on top of the 10% hike imposed earlier this month, have contributed to a widespread stock market sell-off.
Sentiment was already sour on the tariff front, given the spectre of 25% import duties being slapped on the EU, before the US president confirmed his intention to target Canada, Mexico and China next week.
Mr Trump said his proposed 25% tariffs on Mexican and Canadian goods – delayed by a month – would take effect on Tuesday 4 March as planned, alongside an extra 10% duty on Chinese imports.
Beijing’s reaction was to threaten further retaliation, building on the market fears that the Trump administration was risking a deepening global trade war.
Asia felt the most pain in equities after a 1.6% decline was registered on the broad S&P 500.
The Hang Seng in Hong Kong fell more than 3%, while Japan’s Nikkei slumped to a five-month low as demand soared for the safe haven yen.
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In Europe, the DAX in Germany and French CAC were on course to build on declines seen on Thursday, with the manufacturing-heavy DAX losing just shy of 1% at the open.
The UK may have been spared Trump tariff threats – and even promised renewed trade talks during PM Sir Keir Starmer’s meeting at the White House on Thursday – but the FTSE 100 was still feeling some pain.
A decline of 0.4% was registered in early trading.
The main fear among investors is damage to the global economy from a widening and protracted trade fight as Mr Trump battles to secure American jobs through the imposition of tariffs.
But one consequence of higher import costs due to the duties is the fact they risk stoking US inflation, as costs are passed on.
Brent crude oil was down by almost 1% to trade at $73 a barrel.
Cryptocurrencies took the largest hammering.
Bitcoin was 27% below its record high set in January at $79,740 and down by 6% on the day.
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3:02
China hits back at new US tariffs
Mr Trump told reporters in the Oval Office he decided to add the extra tariffs on China and stick to the Tuesday deadline for Canada and Mexico given what his administration sees as insufficient progress on curbing fentanyl flows into the country.
“There are ongoing discussions with the Chinese, Mexico and Canada,” a White House official told the Reuters news agency.
“We’ve gotten a good handle on the migration issue, but there are still concerns on the other issue of fentanyl deaths.”
It was a narrative that was firmly rejected by China’s foreign ministry.
A spokesperson said China would take all necessary measures to firmly safeguard its legitimate interest.
“The US is once again using the fentanyl issue as a pretext to threaten China”, Lin Jian told a regular news conference.
Commenting on the downbeat market mood Derren Nathan, head of equity research at Hargreaves Lansdown, said: “The only certainty in this saga is uncertainty, so keep a close eye on developments between now and 4 March.
“Next on the agenda is reciprocal tariffs pencilled in for 2 April with other major US trading partners. The EU, in particular, will be in focus.
“An amicable start to talks with UK premier Keir Starmer looks to have set the tone for a potential trade deal with the UK but with no details outlined it has not been enough to boost enthusiasm for London listed shares.”
Elon Musk has formally left his role in Donald Trump’s administration.
Mr Musk sported a black eye at a press conference with Mr Trump in which the president confirmed the tech billionaire’s expected departure on Friday.
The billionaire owner of Tesla, SpaceX, and X said his five-year-old son X Æ A-12, or X for short, was responsible for the bruising.
“I was horsing around with my son… I said ‘go ahead and punch me in the face’, and he did,” Mr Musk told reporters in the Oval Office.
“It turns out a five-year-old can punch, actually. I didn’t really feel much at the time.”
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0:42
Musk sported a black eye
At the press conference, Mr Trump thanked Mr Musk “for his incredible service” with his work for his help setting up and running the Department of Government Efficiency, or DOGE, and suggested he would continue to be “back and forth”.
The US president handed Mr Musk a golden key in a White House-branded box, which he described as a “special present”.
“Elon gave an incredible service. [There is] nobody like him. And he had to go through the slings and the arrows, which is a shame, because he is an incredible patriot,” Mr Trump said.
“Some of the media organisations in this room are the slingers,” Mr Musk said when asked about the “slings and arrows” in an apparent dig at The New York Times.
The US president praised Mr Musk as “one of the greatest business leaders and innovators the world has ever produced”, commending him for “stepping forward to put his talents into our nation” by leading DOGE.
Meanwhile, Mr Musk, who was wearing a DOGE-branded baseball cap and a T-shirt with “The Dogefather” written on it, said it was “not the end of DOGE, but the beginning” and that the DOGE team would “only grow stronger”.
The 53-year-old added that he would continue to visit the White House and would still be an adviser to Mr Trump.
Image: Mr Musk wore a T-shirt with “The Dogefather” written on it. Pic: Reuters
During the press conference, Mr Trump also turned to various conflicts around the globe, telling reporters that Israel and Hamas are “very close to an agreement” for a ceasefire in Gaza.
The president said an agreement with Iran to stop it from developing nuclear weapons was also “very close”.
Meanwhile, following recent tensions between India and Pakistan, Mr Trump took credit for de-escalating the situation between the two countries.
The US president had handed Mr Musk the task of cutting government spending by sacking federal workers and eliminating bureaucratic waste as head of the newly formed DOGE department.
Despite promising to save taxpayers as much as $2trn (£1.5trn), DOGE currently estimates its efforts have saved $175bn (£130bn).
Mr Musk claimed the savings could be even higher, saying in the Oval Office on Friday: “We do expect over time a trillion dollars in savings. Say by the middle of next year, with presidential support, we can do it.”
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0:53
The moment took place before his interview with Rob Schmitt in front of the Republican crowd.
Mr Trump read out a list of savings DOGE has allegedly made, including cutting $101m spent on DEI (diversity, equity and inclusion) policies in the Department of Education, $59m on hotel rooms for migrants in New York, $42m on a project for social and behavioural change in Uganda, £24m “for an Arab Sesame Street” and $8m “for making mice transgender”.
But questions have been raised about whether the department has actually saved taxpayers as much money as suggested.
He claimed DOGE had been blamed for cuts that had nothing to do with his department.
Image: Elon Musk carries X Æ A-12 on his shoulders in the Oval Office. File pic: Reuters
“What we found was happening was if there were any cuts anywhere, people would assume that was done by DOGE,” he explained.
“We essentially became the ‘DOGE’ boogie man.”
It comes after Mr Musk’s father, Errol Musk, speaking to Gillian Joseph on The World earlier this week, insisted there had been “no rift between Elon and Donald Trump”.
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4:29
Errol Musk says his son isn’t a very good politician
As a “special government employee”, US law allowed Mr Musk to serve for 130 days, which would have ended around Friday.
He announced he was leaving in a post on X,in which he said: “I would like to thank President Donald Trump for the opportunity to reduce wasteful spending.”
Elon Musk has said he wants to send a spacecraft crewed by humanoid robots on a voyage to Mars by the end of next year.
The tech billionaire outlined his latest schedule for Starship in a video presented at the project’s Starbase home in Texas and posted online on Thursday.
The SpaceX founder had been set to give a presentation, called The Road to Making Life Multiplanetary, on Tuesday night, following a ninth test flight of the spacecraft earlier that evening.
But the speech was cancelled after the vehicle spun out of control about 30 minutes into the launch, having not achieved some of its most important test goals.
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Musk warned there was no guarantee he would be able to meet the Starship timeframe he set out and much depended on overcoming a number of technical challenges, during flight-test development, especially a post-launch refuelling operation while orbiting Earth.
He previously said he aimed to send an unmanned vehicle to the red planet as early as 2018 and had targeted 2024 to launch a first crewed mission there.
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Humans would land on Mars as part of the second or third flights, he said on Thursday, but the first trip would be in the hands of one or more humanoid Optimus design robots built by Tesla, the electric vehicle and battery maker he leads.
The current target to land a human on Mars using Starship is 2028, but it has yet to make an orbit of Earth.
Musk said he wants to make it so that “anyone who wants to move to Mars and help build a new civilisation can do so. Anyone out there. How cool would that be?”.
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At the end of 2026, Mars and Earth align around the sun, reducing the distance between the two planets to its shortest, but still seven to nine months’ travelling time by spacecraft.
Musk said they had a 50-50 chance of meeting that deadline and if Starship isn’t ready by then, SpaceX would wait another two years before trying again.
NASA, which hopes to land astronauts on Mars sometime in the 2030s, is planning to use Starship to return humans to the surface of the moon as early as 2027 – more than 50 years after the last lunar landings of the Apollo era.
Starship’s previous test flights in January and March also failed, with the spacecraft exploding moments after lift-off, raining debris over parts of the Caribbean and forcing scores of commercial jets to change course as a precaution.
Musk shrugged off the latest mishap on Tuesday with a brief post on X, saying it produced a lot of “good data to review” and promising a faster launch “cadence” for the next several test flights.
A federal appeals court has ruled that Donald Trump’s sweeping international tariffs can remain in place for now, a day after three judges ruled the president exceeded his authority.
The Court of Appeals for the Federal Circuit (CAFC) has allowed the president to temporarily continue collecting tariffsunder emergency legislation while it considers the government’s appeal.
It comes after the Court of International Trade blocked the additional taxes on foreign-made goods after its three-judge panel ruled that the Constitution gives Congress the power to levy taxes and tariffs – not the president.
The judges also ruled Mr Trump exceeded his authority by invoking the 1977 International Emergency Economic Powers Act.
The CAFC said the lower trade court and the Trump administration must respond by 5 June and 9 June, respectively.
Trump calls trade court ‘backroom hustlers’
Posting on Truth Social, Mr Trump said the trade court’s ruling was a “horrible, Country threatening decision,” and said he hopes the Supreme Court would reverse it “QUICKLY and DECISIVELY”.
After calling into question the appointment of the three judges, and suggesting the ruling was based on “purely a hatred of ‘TRUMP’,” he added: “Backroom ‘hustlers’ must not be allowed to destroy our Nation!
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1:14
Trump asked about ‘taco trade’
“The horrific decision stated that I would have to get the approval of Congress for these Tariffs. In other words, hundreds of politicians would sit around D.C. for weeks, and even months, trying to come to a conclusion as to what to charge other Countries that are treating us unfairly.
“If allowed to stand, this would completely destroy Presidential Power — The Presidency would never be the same!”
Mr Trump argued he invoked the decades-old law to collect international tariffs because it was a “national emergency”.
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3:16
From April: ‘This is Liberation Day’
Tariffs ‘direct threat’ to business – Schwab
The trade court ruling marked the latest legal challenge to the tariffs, and related to a case brought on behalf of five small businesses that import goods from other countries.
Jeffrey Schwab, senior counsel for the Liberty Justice Center – a nonprofit representing the five firms – said the appeal court would ultimately agree that the tariffs posed “a direct threat to the very survival of these businesses”.
US treasury secretary Scott Bessent also told Fox News on Thursday that the initial ruling had not interfered with trade deal negotiations with partners.
He said that countries “are coming to us in good faith” and “we’ve seen no change in their attitude in the past 48 hours,” before saying he would meet with a Japanese delegation in Washington on Friday.