China has played down the risk of damage to its exports from Donald Trump’s tariffs, with an official saying the “sky won’t fall”, as stock markets rose amid signs of a retreat on electronics restrictions.
The US president claimed his strategy was working on Monday, with record levels of investment. Addressing reporters at the White House, he continued to threaten new tariffs on pharmaceutical goods.
As fears of a potential downturn continue to mount, Kevin Hassett, the director of the US national economic council, pushed back against warnings that a recession could take hold this year. “100% not,” he told Fox Business.
Leading tech stocks struggled for direction amid confusion over the Trump administration’s stance on key US imports including smartphones and semiconductors.
While it emerged that such electronic goods and components were exempt from the sweeping tariffs imposed this month, Trump and his officials have signaled they may not be spared for long.
“THE BEST DEFINITION OF INTELLIGENCE IS THE ABILITY TO PREDICT THE FUTURE!!!” Trump wrote on his Truth Social platform on Monday, as firms around the world struggled to keep up with the latest developments, let alone judge what might happen next.
Consumers are starting to feel the impact of the trade tensions. Sony increased the price of its PlayStation 5 by 25% in some markets in Europe, the Middle East, Africa and Oceania, citing “a challenging economic environment” as the video game industry reels from the impact of Trump’s tariffs.
China, meanwhile, has vowed to stand firm in the face of Trump’s tariffs. The world’s second-largest economy has diversified its trade away from the US in recent years, according to Lyu Daliang, a customs administration spokesperson, in comments reported by state-owned agency Xinhua.
Beijing has retaliated forcefully to Washington’s tariffs, with 125% levies on US imports against the US’s total of 145% border taxes on goods moving the other way. The trade war has prompted turmoil on financial markets since Trump first revealed tariffs on every country in the world on 2 April. Since then he has partly retreated on the highest levies on most trading partners for at least 90 days, but has doubled down in his spat with China.
The White House offered further relief over the weekend with an exemption from the steepest tariffs for electronics including smartphones, laptops and semiconductors. But Trump officials later appeared to walk that back with the commerce secretary, Howard Lutnick, saying such devices would be “included in the semiconductor tariffs which are coming in probably a month or two”.
Trump said on Sunday night on Truth Social that “NOBODY is getting ‘off the hook’,” highlighting that smartphones were still subject to 20% levies and suggesting they could still rise higher.
However, investors on Monday appeared unconvinced by Trump’s attempts to play down the retreat. Japan’s Nikkei gained 1.2% while Hong Kong’s Hang Seng rose by 2.2% and the Shanghai and Shenzhen exchanges climbed by 0.8% and 1.2%, respectively.
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European stock market indices also jumped in opening trades, with London’s FTSE 100 up by 2.1%, Germany’s Dax up 2.6%, and France’s Cac 40 up 2.4%.
On Wall Street, the benchmark S&P 500 closed up close to 0.8% and the Dow Jones industrial average also gained 0.8%. The technology-focused Nasdaq Composite was 0.6% higher.
“The sky won’t fall” for Chinese exports, China’s Lyu said. “These efforts have not only supported our partners’ development but also enhanced our own resilience.”
The customs report also played up China’s “vast domestic market”, and said “the country will turn domestic certainty into a buffer against global volatility”. China has increasingly tried to stimulate private consumption.
China’s president, Xi Jinping, on Monday criticised the US tariffs, during a visit to Vietnam. Vietnam has in recent decades grown to become the eighth largest source of goods for US consumers, but it is facing the threat of 46% tariffs when Trump’s 90-day pause expires.
In an article in a Vietnamese newspaper, Xi said that a “trade war and tariff war will produce no winner, and protectionism will lead nowhere”.
