Stocks sink as US, China dig in for trade war

STOCKS FELL THURSDAY as the U.S. and China dug in for a prolonged trade war that could have ramifications up and down the global economy.

Only a day earlier, the financial markets skyrocketed on news that President Trump would dramatically scale back his country-specific reciprocal tariffs.

The optimism was short-lived, as traders digested the implications of massive tariffs enacted between the world’s two largest economies.

"The drag from trade policy is likely to be somewhat less than before, and thus the prospect of a recession is a closer call,” JPMorgan said in a note titled "Liberation Day Mulligan." “However, we still think a contraction in real activity later this year is more likely than not.”

Spokespeople for the Chinese Foreign Ministry flooded social media and news outlets with defiant statements.

“A tariff-wielding barbarian who attempts to force countries to call and beg for mercy can never expect that call from China,” Huang Jingrui, spokesperson for China’s Foreign Ministry office in Hong Kong, wrote in the South China Morning Post.

China is implementing new 84 percent tariffs on the more than $140 billion in U.S. goods it receives, including on oil, gas and crops.

The U.S. will slap a 125 percent tariff on the nearly $440 billion in goods coming in from China, with many tech companies bracing for pain.

The Hill’s Miranda Nazzaro reports that Apple, Dell Technologies and HP are likely to be impacted due to their reliance on global manufacturing:

“Under the tariffs, the price of Apple’s newest iPhone 16 Pro Max 256 GB could increase by as much as 56 percent, driving the price tag from about $1,199 to $1,874, UBS analysts shared in a research note when the Chinese tariffs stood at 104 percent.”

Meanwhile, China will limit the number of American movies it allows into the country, taking aim at a battered U.S. entertainment industry.

“I think I’ve heard of worse things,” Trump said during a Cabinet meeting.

In an appearance on CNN, Sen. Jeff Merkley (D-Ore.) described the back-and-forth as a “testosterone battle” between Trump and Chinese President Xi Jinping.

"I have great respect for President Xi,” Trump said Thursday.

“He's been a friend of mine for a long period of time. I think that we'll end up working out something that's very good for both countries. I look forward to it."

Trump’s 90-day pause on country-specific tariffs opens a window for the administration to reach deals that could address trade imbalances.

“There’s a big inventory of deals that are right close to the finish line,” National Economic Council Director Kevin Hassett told CNBC.

European Union member countries put their announced U.S. tariffs on hold in that time.

Canadian Prime Minister Mark Carney said negotiations with the U.S. will start after the Canadian federal election.

Trump threatened to return to the heavy reciprocal tariffs if countries don’t strike deals with the U.S.

“If we can’t make the deal that we want to make or we have to make or that’s, you know, good for both parties — it’s gotta be good for both parties — then we go back to where we were,” Trump said.

Democrats are seeking information pertaining to a social media post Trump made Wednesday morning saying “THIS IS A GREAT TIME TO BUY” stocks.

The president announced his pause on most tariffs later in the afternoon, leading to one of the biggest one-day gains in S&P 500 history.

“We need to get to the bottom of the possible stock manipulation that is unfolding before the American people, including what, if any, advance knowledge did members of the House Republican conference have of Trump’s decision to pause the reckless tariffs that he put into place?” said House Minority Leader Hakeem Jeffries (D-N.Y.).

Sens. Adam Schiff (D-Calif.) and Ruben Gallego (D-Ariz.) wrote in a letter to the Office of Government Ethics:

“This sequence of events raises grave legal and ethics concerns. The president, his family and his advisors are uniquely positioned to be privy to and take advantage of non-public information to inform their investment decisions.”

Rep. Alexandria Ocasio-Cortez (D-N.Y.) posted on X:

“Any member of Congress who purchased stocks in the last 48 hours should probably disclose that now."