Stock Markets Rattled by Latest Escalation in U.S.-China Trade War

Markets were rattled on Friday as the trade war between the United States and China continued to escalate.

The Stoxx Europe 600 index slipped about 1 percent after China raised its tariffs on U.S. imports to 125 percent and then recovered its losses by early afternoon in Europe. Futures trading suggested that the S&P 500 index was set to open slightly higher, reversing earlier losses, at the end of an extremely volatile week.

Markets around the world have veered sharply between large gains and losses amid the turmoil and confusion caused by President Trump’s pronouncements on tariffs. The U.S. dollar and government bonds have also dropped. Analysts at ING said on Friday that there was a “confidence crisis” in the dollar as the U.S. assets lost some of their safe haven appeal.

Beijing’s latest tariff retaliation came after markets closed in Asia. During Friday’s trading session, stocks in Hong Kong rose 1.6 percent, stocks in mainland China rose 0.4 percent and those in Taiwan by 2.8 percent. But Japan’s Nikkei 225 dropped 2.9 percent, catching up to the decline on Wall Street the day before.

All week, markets have been whipped around by the varying intensity and focus of Mr. Trump’s trade policy. Steep “reciprocal tariffs” were imposed on dozens of countries and then, hours later, paused for 90 days. At the same time, Washington and Beijing ratcheted up tariffs on goods traded between the countries.

On Thursday, the S&P 500 index slumped 3.5 percent after the Trump administration clarified that tariffs on Chinese imports were a total of 145 percent, not 125 percent as it had said the day before.