Global markets plunged on Friday after former U.S. President Donald Trump threatened to unleash a new round of “massive” tariffs on China, reigniting fears of another trade war between the world’s two largest economies.
Trump criticized Beijing for what he described as “hostile trade practices,” including China’s new export controls on rare earth materials, which are vital for manufacturing advanced technologies. Speaking to reporters, he said several “major countermeasures” were under consideration and added that he no longer saw the need to meet Chinese President Xi Jinping at a summit later this month.
The remarks rattled Wall Street, sending major indices tumbling. The tech heavy Nasdaq dropped by about two percent in late morning trading, while the Dow Jones Industrial Average and S&P 500 also fell sharply. The U.S. dollar weakened against major currencies, reflecting growing investor anxiety over the renewed trade tensions.
Until this week, Washington and Beijing had been working to ease months of tariff disputes, with hopes that the Trump Xi meeting would help extend a fragile truce. But China’s announcement on Thursday of new restrictions on rare earth exports, key components in electric vehicles and semiconductors, reignited economic tensions between the two powers.
Oil markets also felt the heat. The U.S. benchmark, West Texas Intermediate (WTI), dropped below $60 per barrel, while Brent crude fell to $63.20, both down more than three percent. Analysts linked the slide to Trump’s comments, which threaten to slow global trade and demand for energy, just as a Gaza ceasefire had temporarily eased supply fears.
Across Europe and Asia, stock exchanges followed the downward trend. Paris’s CAC 40 and Frankfurt’s DAX each lost 1.5 percent, while London’s FTSE 100 slid nearly one percent. Markets in Tokyo, Hong Kong, and Shanghai also declined. Despite this, tech optimism lingered earlier in the week after OpenAI’s massive chip deals with AMD, Samsung, and SK Hynix boosted investor interest in artificial intelligence. Still, some analysts warned the tech rally may be overheating. “The AI bubble debate remains a hot topic,” said Ipek Ozkardeskaya of Swissquote Bank, noting that some see it as “the new internet bubble 2.0 waiting to burst.”