European stock markets slump as Trump's tariffs kick in

Indices fell back into the red, with Paris down 2.4 percent and Frankfurt dropping 2.2 percent, as goods from the European Union now face a 20 percent tariff when entering the United States.

London slid 2.3 percent, with Britain having been hit with a 10 percent levy on Saturday.

Trump has upended the world economy with sweeping tariffs that have raised the spectre of an international recession, but has ruled out any pause in his aggressive trade policy despite a dramatic market sell-off.

Trump had initially warned he would impose additional levies of 50 percent if Beijing refused to stop pushing back against his tariffs, but then raised the stakes even further by imposing 104 percent levies against China.

"I have great respect for China but they can not do this," Trump said at the White House earlier this week.

China swiftly hit back, blasting what it called "blackmailing" by the United States and vowing "countermeasures" if Washington imposes more tariffs.

"If the US insists on going its own way, China will fight it to the end," a spokesperson for Beijing's commerce ministry said on Tuesday.

'Ignorant, impolite'

In a mounting war of words, China's foreign ministry also condemned "ignorant and impolite" remarks by US Vice President JD Vance in which he complained the United States had for too long borrowed money from "Chinese peasants".

The ministry said that "pressure, threats and blackmail are not the right way to deal with China".

The European Union sought to cool tensions, with the bloc's chief Ursula von der Leyen warning against worsening the trade conflict in a call with Chinese Premier Li Qiang.

She stressed the "vital importance of stability" for the world's economy as well as "the need to avoid further escalation," according to a readout from EU officials.

The Chinese premier told von der Leyen that the world's number two economy has the "tools" necessary to weather economic headwinds.

"China can fully hedge against adverse external effects, and is fully confident of maintaining sustained and healthy economic development," he said, according to state news agency Xinhua.

The EU said Tuesday that it expects to present as soon as next week its response to the 20-percent levies it is facing under Trump's latest tariff wave, with Germany and France advocating a tax targeting US tech giants.

But Brussels has also proposed an exemption from tariffs on industrial products, including cars, which Trump said was not enough to resolve the US trade deficit with the EU.

"The European Union has been very, very bad to us," Trump said.

In retaliation for US levies introduced in mid-March on steel and aluminium, the EU plans tariffs of up to 25 percent on US goods ranging from soybeans to motorcycles and make-up, according to a document seen by AFP.

But US bourbon was spared after Trump threatened to hit European wine and spirits with massive retaliatory duties.