In response, Chinese officials are preparing a set of “extraordinary” measures to soften the blow of these tariffs. Proposed actions include easing both monetary and fiscal policies, such as lowering key interest rates and expanding the national budget deficit. Beijing is also looking to boost domestic consumption and shore up its financial markets. These plans come as markets reel, with the Shanghai Composite Index plunging over 6% and the Hang Seng Index dropping more than 13% in early Monday trading.
The financial sector has suffered particularly steep losses. Shares of HSBC listed in Hong Kong fell 13%, marking their biggest one-day drop since 2009, while Standard Chartered’s stock declined over 16%, on track for a record fall. The escalating trade war between the U.S. and China is disrupting global trade patterns, hurting Chinese corporate earnings, and raising concerns about a slowdown in worldwide demand.
The impact has rippled far beyond China and Hong Kong. Japan’s Nikkei 225 slid 7.8%, and key European indexes such as Germany’s DAX and France’s CAC 40 dropped between 5% and 7%. In the U.S., futures pointed to continued losses following a 6% fall in the S&P 500. The market chaos has been fueled by the U.S. imposing 34% tariffs on Chinese goods, prompting equivalent retaliatory measures from China. President Trump defended the tariffs, asserting that they are necessary for long-term economic correction, even if they cause short-term disruptions.
