A global trade war touched off by US President Donald Trump’s sweeping tariffs escalated further on Monday, as Trump threatened to increase duties on China and the European Union proposed counter-tariffs of its own.

Financial markets across the globe posted a third day of losses as investors worried that steep trade barriers around the world’s largest consumer market could lead to a recession. The S&P 500 closed lower after a rollercoaster session in which it touched its lowest level in more than a year.

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 liberalization.

“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. “Now, I don’t mind going through it because I see a beautiful picture at the end.”

Trump spoke hours after he ratcheted up a confrontation with China, the world’s No. 2 economy.

Trump said he would impose an additional 50% duty on US imports from China on Wednesday if it did not withdraw the 34% tariffs it had imposed on US products last week. Those Chinese tariffs had come in response to 34% “reciprocal” duties announced by Trump.

Beijing responded with defiance. Trump’s threat was a “typical move of unilateralism, protectionism and economic bullying,” Chinese embassy spokesperson Liu Pengyu said.

“We have stressed more than once that pressuring or threatening China is not a right way to engage with us,” he added. “China will firmly safeguard its legitimate rights and interests.”

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.

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

Trump said his administration would open trade talks with Japan, one of Washington’s closest allies in Asia, and administration officials say dozens of other countries have reached out as well with the hope of heading off the tariffs as high as 50% due to take effect on Wednesday.

The back-and-forth injected further turbulence into global financial markets, which have fallen steadily since Trump’s announcement.

Trump administration officials say the president is following through on a promise to reverse decades of trade liberalization 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.”

China’s retaliatory levies are the firmest response yet to Trump’s announcement, which has been met with bewildered condemnation from other leaders.

After stocks in mainland China and Hong Kong cratered on Monday, China’s sovereign fund stepped in to try to stabilise the market.

Shares in Taiwan plummeted almost 10% - the biggest one-day percentage fall on record.

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.”

NEW REALITY OR NEGOTIATING PLOY?

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

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.

Volkswagen’s Audi is holding back cars that arrived in US 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.

Some governments in Asia have signalled a willingness to engage.

Taiwanese President Lai Ching-te on Sunday offered zero tariffs as the basis for talks, while an Indian government official said Delhi does not plan to retaliate.

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.