China vowed not to bow to “blackmail” from the United States as a global trade war ignited by US President Donald Trump’s sweeping tariffs showed little sign of abating on Tuesday, even as battered stock markets steadied.

The rebuke came after Trump said he would impose an additional 50% duty on US imports from the world’s No. 2 economy on Wednesday in response to Beijing’s decision to match the 34% ‘reciprocal’ duties Trump initially unveiled last week.

“The US side’s threat to escalate tariffs against China is a mistake on top of a mistake, once again exposing the American side’s blackmailing nature,” China’s commerce ministry said.

 “If the US insists on having its way, China will fight to the end.”

The European Union proposed counter-tariffs of its own to Trump’s tariff onslaught that swept up dozens of countries, sent financial markets into a tailspin, and fuelled expectations that the global economy may be headed for recession.

Stock markets appeared to find a firmer footing after a gut-wrenching few days for investors, which prompted some business leaders, including those close to Trump, to urge the president to reverse course.

Japan’s Nikkei index rose 6% on Tuesday, rebounding from a 1½-year low hit in the previous session, after Trump and Japan Prime Minister Shigeru Ishiba agreed to open trade talks in a phone call late Monday.

Chinese blue-chips climbed 0.7%, recouping a fraction of the more than 7% slide on Monday. Hong Kong’s Hang Seng Index jumped 2% after suffering the worst day since 1997 as a result of what the trading hub’s leader called “ruthless” tariffs.

US stock futures also pointed higher after slumping to the lowest level in more than a year.

Indonesian markets were slammed, however, with stocks shedding 9% and the rupiah currency ploughing a record low as trading resumed on Tuesday after an extended holiday.

Trump said the tariffs — a minimum of 10% for all US imports, with targeted rates of up to 50% — would help the United States recapture an industrial base that he says has withered over decades of trade liberalisation.

“It’s the only chance our country will have to reset the table. Because no other president would be willing to do what I’m doing, or to even go through it,” he told reporters at the White House.

Europe eyes counter-measures

The European Commission, meanwhile, proposed counter-tariffs of 25% on a range of US goods, including soybeans, nuts, and sausages, though other potential items like bourbon whiskey were left off the list, according to a document seen by Reuters.

Officials said they stood ready to negotiate a “zero for zero” deal with Trump’s administration.
“Sooner or later, we will sit at the negotiation table with the US and find a mutually acceptable compromise,” EU Trade Commissioner Maros Sefcovic said at a news conference.

The 27-member bloc is struggling with tariffs on autos and metals already in place and faces a 20% tariff on other products on Wednesday. Trump has also threatened to slap tariffs on EU alcoholic drinks.

Investors and political leaders have struggled to determine whether Trump’s tariffs are permanent or a pressure tactic to win concessions from other countries.

US Treasury Secretary Scott Bessent met with Trump in Florida on Sunday, Politico reported, to urge him to emphasise striking trade deals with partners in order to reassure the markets that there is an endgame to the US strategy.

Administration officials say dozens of other countries have reached out with the hope of heading off the tariffs due to take effect on Wednesday.

Trump administration officials say the president is following through on a promise to reverse decades of trade liberalisation that he believes has undercut the US economy.

“He’s doubling down on something that he knows works, and he’s going to continue to do that,” White House economist Kevin Hassett 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.”

Business leaders baulk

Wall Street leaders issued warnings on US 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.”

Ackman is one of a handful of Trump supporters who questioned the strategy. Billionaire Elon Musk, who is leading Trump’s effort to slash government spending, called for zero tariffs between the US and Europe over the weekend.

On Monday, Trump trade adviser Peter Navarro dismissed the Tesla CEO as a “car assembler.”

Investors are now betting that the growing risk of recession could prompt the US Federal Reserve to cut rates as early as next month. Trump repeated his call for the central bank to lower rates on Monday, but Fed chief Jerome Powell has so far indicated he is in no rush.