Tariffs latest: Beijing takes fight to Trump - as global markets rally after tariff U-turn

Relief for global stock markets

Global shares surged and a chaotic bond selloff stabilised after Donald Trump said he would temporarily lower the hefty duties he had just imposed on dozens of countries.

Asian and European markets are up.

China is also seeing strong markets despite being slapped with a 125% tariff.

Why Chinese stocks are doing well - perhaps surprisingly

It's counterintuitive, but the country worst hit by Trump's tariffs is experiencing strong stock market performances.

While most countries got a 90-day reprieve from the US president's so-called reciprocal tariff, China's only been slapped with higher taxes, now brought up to 125%.  

Despite that, the Shanghai Composite stock index closed up 1.16%, and the Shenzhen Component jumped 2.25%.

Chinese stocks got a boost through government policy. 

Support came as the authorities encouraged state-owned financial institutions to buy more stocks, and some stock market-listed companies announced plans to buy back shares, which gave a boost to investors. 

Inflation data released earlier today showed prices were falling in the world's second-largest economy. 

EU pauses retaliatory tariffs on US

The EU is pausing its retaliatory tariffs on the US for 90 days - after Donald Trump's reversal last night.

European Commission president Ursula von der Leyen says the bloc wants to give negotiations a chance.

"While finalising the adoption of the EU countermeasures that saw strong support from our member states, we will put them on hold for 90 days," she says.

"If negotiations are not satisfactory, our countermeasures will kick in.

"Preparatory work on further countermeasures continues."

Trump hit the EU with a 20% tariff on "liberation day". The EU's counter-tariffs included a 25% levy on a wide range of US products, including almonds, orange juice, poultry, soya beans, steel and aluminium, tobacco and yachts.

A proper trade war between world's two biggest economies

There will be a drag on economic growth if tariffs remain on China, Sky's business presenter Darren McCaffrey says.

It is "unsurprising" that the markets have bounced back this morning, he says, but it has been a "kangaroo stock market" with "lots of volatility".

The pause is good news, especially for sectors that have been hard hit such as the car industry - and in the UK the cost of borrowing has gone down.

"There still remains some bad news to this and that is the tariffs still remain in China  - that is a proper trade war between the world's largest economies," he says.

"That is going to be a drag on economic growth if it continues and on growth here in the UK."

He also notes this "is just a pause".

"Trump's changed course quite a lot and he could do it again and that volatility will feed into a lot of the uncertainty we will see in the coming months," he adds.

A 'master strategy' - or did Trump blink?

The White House is, unsurprisingly, spinning Donald Trump's tariff policy as a "master strategy" - but others are convinced otherwise.

Homeland security adviser Stephen Miller says Trump's actions over the past week amount to "bold statesmanship" and "brilliant tactical planning", claiming he "has done more to reform broken international trade in days than anyone has achieved in decades".

But another read is that the president was forced to bow to the reality of the market meltdown.

Business analyst Ian King says the bond markets forced Trump to blink.

The White House was confronted by a potential hike in borrowing costs for millions of American homeowners, consumers and businesses - and this in turn led them to rein back tariffs, he says.

Charts show markets rallying around the world

It's a positive story for markets across the board today, even in China.

In the UK, the FTSE 100 is up (see more in our previous post) - following the trend across Europe...

Germany's DAX 40 is up 5.71% while France's CAC 40 is up 5.42%.

The IBEX 35, Spain's stock exchange, is up 5.49%.

The Italian national stock exchange, MIB 30, is also up by over 6%.

When it comes to European shares, the pan-European STOXX 600 jumped 5.9% at 7.52am UK time, after losing 12.5% since the tariffs took effect on 2 April.

The Shanghai Composite has risen slightly, despite Donald Trump's additional tariffs on China...

But the biggest surge of all was in the US last night after the president made the announcement, with the Nasdaq rising more than 12%...

FTSE 100 rises by 4% as UK markets rebound

The FTSE 100 has risen by more than 4% this morning.

These market figures follow a significant rally for markets in the US and Asia, after Donald Trump said he would be delaying tariffs on most nations for 90 days while raising his tax rate on Chinese imports to 125%. 

Ray Dalio calls for US-China trade deal

Ray Dalio, the billionaire founder of the world's largest hedge fund, has called for a US deal with the Chinese on tariffs.

He welcomed Donald Trump's tariff reversal on X, saying he had "stepped back from a worse way" of dealing with US debt and trade imbalances - one of the president's stated aims of his tariff policy. 

Negotiating is a "better way", he said, and a deal with Beijing could be a "win-win".

Dalio, 75, founded Bridgewater Associates, an American investment management firm, in 1975 and is worth an estimated $14bn. 

What led to Trump rethink?

Donald Trump's tariffs has dominated the US and international media since his "liberation day" announcement last Wednesday.

His favourite outlet Fox News has focused heavily on the aftermath of his policies.

And it may have played a part in prompting Trump to reverse the policy, according to a former British ambassador to Washington.

Speaking to Anna Jones on Sky News Breakfast, Sir Peter Westmacott says when Trump has done something in the past that spooked he tended to "think again".

"Somebody obviously got to him, as well as the television coverage, and made him think he better change course," Westmacott says.

Asked if the president's tariffs had damaged his authority, he added: "This is a president who we know was going to be unpredictable and impulsive and a bit whimsical.

"He will do what he wants to do."

He says when it comes to the people who voted for him "this is what they wanted". 

"They wanted a strong leader and they don't really mind the basis upon which he makes his decisions," he adds.

EU to reduce trade barriers in single market after tariff war

Donald Trump's tariffs climbdown is an "important step towards stabilising the global economy", Ursula von der Leyen has said.

In a statement, the European Commission president says the EU still want trade talks with the US, but will "step up work to lift barriers in our own single market" - which she describes as "our anchor of stability and resilience".

US 'holding throats of countries' to get concessions

Chinese foreign ministry spokesman turns to the effect Donald Trump's tariffs are having on the rest of the world.

Lin Jian says the US is holding the throats of other countries, and that Washington's "threat" is an attempt to "coerce" countries into making concessions.

He also says ties between China and Spain are an "integral" part of Beijing's broader relationship with the EU.

These comments come after the Spanish government said the country would pursue closer trade ties with China in the interests of its citizens and of the EU, rejecting a US warning that moving closer to Beijing would be "cutting your own throat".

After a few questions on other topics, the briefing comes to an end.

China: 'If US wants to talk it must show respect'

Donald Trump has said that he is waiting for a call from China to begin trade talks, and Chinese foreign ministry spokesman Lian Jian is asked whether there has been any contact between the two countries or if China will call.

His response is emphatic: "Pressuring, threatening and extorting China is not the right way to deal with us... "If the US wants to talk it should show an attitude of equality, respect and mutual benefit.

He repeats that if the US is determined to fight a trade war "China's response will continue to the end".

Beijing: We have no fear in trade war against selfish Trump

The Chinese foreign ministry briefing begins, with spokesman Lin Jian asked about tariffs immediately.

He says the US is using tariffs as a "weapon to exert maximum pressure" and "seek selfish gains".

He says: "This move is against the whole world.

Referring to Beijing's 84% retaliatory tariff, he says the "necessary countermeasures against the US's bullying moves" are aimed at protecting Chinese sovereignty, international fairness and the common interests of the international community.

He predicts the US move will "end in failure".

"Tariff wars and trade wars have no winner," he says. "China does not want to fight them but has no fear when they come our way."

He says if the US is determined to fight then China's response "will continue to the end".

UK markets rise on opening - as hopes grow for semblance of calm

These market updates should come with a whiplash warning.

After steep drops yesterday, the UK's benchmark index is now posting sizeable gains. The index of the 100 most valuable companies listed on the London Stock Exchange - the FTSE 100 - rose 1% on the open.

The bigger FTSE 250 - comprising more companies based in the UK - was up a big 2%. 

With a 90-day pause on US retaliatory tariffs, we may see calmer financial market conditions, but maybe don't take your seatbelt off yet. 

UK stocks followed similar rallies for European markets this morning and Asian markets overnight.

-SKY NEWS