The tariffs of 104% on imports from China announced yesterday by the United States went into effect at 7.00am GMT, escalating the trade war with the Asian giant.

China was already due to see a 34% tariff increase on Wednesday as part of Donald Trump’s “retaliatory” tariff package. However, the president added another 50% after Beijing did not back down from its promise to impose a corresponding 34% tariff on US goods by midday Tuesday – bringing the total tariffs to 84%. This figure comes on top of the Chinese tariffs already in place before Trump’s second term.

At the same time, the US administration says it is ready to begin talks with other trading partners targeted by the sweeping tariffs.

Stocks and oil slip again

US stocks fell on Tuesday for a fourth straight day of trading after Trump’s announcement of tariffs last week, with the S&P 500 closing below 5,000 points for the first time in nearly a year. The index is now 18.9% below its most recent high on February 19, close to the 20% drop that defines a bear market.

S&P 500 companies have lost $5.8 trillion in market value since Trump’s tariffs were announced last Wednesday, the biggest four-day loss since the benchmark index was created in the 1950s, according to LSEG data.

Global markets had previously posted gains on hopes that Trump might be willing to negotiate the lowering of a series of country- and product-specific trade barriers he is erecting around the world’s biggest consumer market.

Japan’s Nikkei was down 3.1 percent at 32,010.93 points Wednesday morning and other Asian markets were braced for a drop just hours before the tariffs go into effect.

Oil slides nearly 4%

Prices of oil retreated to their lowest level in more than four years in early trading on Wednesday on concerns about looming demand fuelled by an escalating tariff war between the US and China, the world’s two biggest economies, and rising supply prospects.

Brent futures lost $2.13, or 3.39%, to $60.69 a barrel. US West Texas Intermediate crude futures fell $2.36, or 3.96%, to $57.22. Brent touched its lowest level since March 2021 and WTI touched its lowest level since February 2021.

Tariffs in place – talks begin with Japan and South Korea

The government has scheduled talks with South Korea and Japan, two close allies and important trading partners, and Italian Prime Minister Georgia Meloni is expected to visit next week.

“These are individualized, highly personalized agreements,” Trump said at an event at the White House, where he signed executive orders aimed at boosting coal production. “We’ve had conversations with many, many countries, over 70, all wanting to participate. Our problem is we can’t see that many so quickly.”

However, the White House made it clear that country-by-country tariffs of up to 50 percent would nonetheless take effect at midnight Tuesday (local time), as planned.

Administration officials said they would not prioritize negotiations with the world’s No. 2 economic powerhouse, China.

“Right now, we have been instructed to prioritize our allies and our trading partners, such as Japan and South Korea and others,” White House economic adviser Kevin Hassett told Fox News.