European stocks crash, Asia panic as China retaliates against Trump tariffs

Updated 10.16am.

European stock markets plummeted in early trading Monday, with Frankfurt slumping as much as 10 percent as a global sell-off intensified on US President Donald Trump's tariffs.

Indices were in freefall as the European Union faces 20 percent tariffs due to take effect on Wednesday, after Britain and other nations were hit with 10 percent duties on Saturday.

Frankfurt clawed back some of its early losses to trade down around seven percent some 40 minutes into the trading day. 

Milan dived 7.5 percent as Paris, Madrid and Amsterdam retreated more than six percent. 

London and Oslo lost over five percent in early deals. 

"The big flight to cash continues as investors seek a shelter for their money amid the tariff storm," noted Susannah Streeter, head of money and markets at Hargreaves Lansdown.

"Trump has dashed hopes for an easing of policy by calling tariffs 'medicine' and investors are absorbing the implications of this bitter pill for the global economy."

Fears of recession in the United States and beyond caused a sea of red across equity markets, leaving no sector spared.

In Paris, share prices of planemaker Airbus, engine manufacturer Safran and Gucci-owner Kering led losses with each crashing 10 percent.

German arms company Rheinmetall plunged more than 13 percent and Commerzbank sank nearly 12 percent in Frankfurt.

Aerospace group Melrose Industries topped the losers board in London with a drop of around 8.5 percent. 

Earlier, panic selling gripped markets in Asia  

"(This) is blunt-force economic warfare," said Stephen Innes at SPI Asset Management.

"The market's telling you in plain language: global demand is vanishing, and a global recession is on the cards and coming on fast," Innes said.

Trillions of dollars have been wiped off stocks worldwide, and on Monday Asian equities took an even heavier hammering as investors moved to safer assets.

In Japan the Nikkei was off an eye-watering 6.5 percent, falling almost eight percent in early trade. 

In Hong Kong the Hang Seng plunged almost 10 percent and the Shanghai Composite more than four percent. 

Taiwan's main index -- like in Hong Kong and Shanghai closed on Friday -- plummeted almost 10 percent and Singapore 8.5 percent. 

US oil dropped below $60 a barrel for the first time since April 2021 on worries of a global recession.

- 'Deals and alliances' -

Benjamin Netanyahu, prime minister of Israel -- which has been hit with 17 percent tariffs, despite being one of Washington's closest allies -- was due Monday to become the first leader to meet Trump since last week's announcement.

Britain's Prime Minister Keir Starmer warned in a newspaper op-ed that "the world as we knew it has gone," saying the status quo would increasingly hinge on "deals and alliances."

Trump's staggered deadlines have left space for some countries to negotiate, even as he insisted he would stand firm and his administration warned against any retaliation.

"More than 50 countries have reached out to the president to begin a negotiation," Kevin Hassett, head of the White House National Economic Council, told ABC's This Week on Sunday, citing the US Trade Representative.

Vietnam, a manufacturing powerhouse that counted the US as its biggest export market in the first quarter, has already reached out and requested a delay of at least 45 days to thumping 46 percent tariffs imposed by Trump.

Treasury Secretary Scott Bessent also told NBC's Meet the Press that 50 countries had reached out.

But as for whether Trump will negotiate with them, "I think that's a decision for President Trump," Bessent said. 

"At this moment he's created maximum leverage for himself... I think we're going to have to see what the countries offer, and whether it's believable," Bessent said. 

Other countries have been "bad actors for a long time, and it's not the kind of thing you can negotiate away in days or weeks," he claimed.

Peter Navarro, Trump's tariff guru, has pushed back against the mounting nervousness and insisted to investors that "you can't lose money unless you sell," promising "the biggest boom in the stock market we've ever seen."

Russia has not been targeted by the latest raft of tariffs, and Hassett cited talks with Moscow over its invasion of Ukraine as the reason for their omission from the hit list.

On Wednesday a White House official suggested the reason for Russia's omission was because trade was negligible thanks to sanctions.

Trump has long insisted that countries around the world that sell products to the United States are in fact ripping Americans off, and he sees tariffs as a means to right that wrong.

"Some day people will realize that Tariffs, for the United States of America, are a very beautiful thing!" Trump wrote on Truth social Sunday.

But many economists have warned that tariffs are passed on to US consumers and that they could see price rises at home.

"I don't think that you're going to see a big effect on the consumer in the US," Hassett said.