NEW YORK/WASHINGTON/FRANKFURT: US President Donald Trump cautioned against “stupid” panic on Monday as a global stock market rout deepened after Beijing retaliated against his tariffs offensive.

Shares in New York joined the slump, with all three major US indices falling more than three percent in early trading. European equities were deep in the red but Asia fared worse, with Hong Kong’s Hang Seng index crashing 13.2 percent, its biggest drop since the 1997 Asian financial crisis, and Tokyo’s Nikkei 225 falling an eye-watering 7.8 percent. A 10-percent “baseline” tariff on imports from around the world took effect Saturday but a slew of countries will be hit by higher duties from Wednesday, with levies of 34 percent for Chinese goods and 20 percent for EU products. Minutes before the markets opened in New York, Trump posted that his tariff reforms were “a chance to do something that should have been done decades ago.”

“Don’t be Weak! Don’t be Stupid!... Be Strong, Courageous, and Patient, and GREATNESS will be the result!” he urged. Beijing announced last week its own 34-percent tariff on US goods, which will come into effect on Thursday. The move pushed Trump to chastise China for not heeding “my warning for abusing countries not to retaliate” as he called Beijing “the biggest abuser of them all” on tariffs. But Chinese vice commerce minister Ling Ji said the tit-for-tat duties “are aimed at bringing the United States back onto the right track of the multilateral trade system.”

“The root cause of the tariff issue lies in the United States,” Ling told representatives of US companies on Sunday. EU trade ministers gathered in Luxembourg on Monday to discuss the bloc’s response, with Germany and France having advocated a tax targeting US tech giants. “We must not exclude any option on goods, on services,” said French Trade Minister Laurent Saint-Martin. The 27-nation bloc should “open the European toolbox, which is very comprehensive and can also be extremely aggressive,” he said.

Trump on Sunday had doubled down, saying “sometimes you have to take medicine to fix something.” He told reporters aboard Air Force One that world leaders were “dying to make a deal.”

Trillions of dollars have been wiped off stocks worldwide since Trump announced the tariffs last week, and the losses deepened on Monday. The Stoxx Europe 600 index was down five percent in early afternoon deals, with more than 1.5 trillion euros of market capitalization going up in smoke over just a few days. The main US oil contract dropped below $60 a barrel for the first time since April 2021 on worries of a global recession. “The market’s telling you in plain language: global demand is vanishing, and a global recession is on the cards and coming on fast,” said Stephen Innes at SPI Asset Management. US officials said more than 50 countries have reached out to Trump to negotiate.

“People are afraid the worst is yet to come. They’re worried about a market crash,” said Robert Pavlik, senior portfolio manager at Dakota Wealth Management in Connecticut. “They’re worried about what follows - a recession here domestically and then globally, leading to a possible depression.”

Trump had shown no sign of relaxing his tariff policy earlier on Monday, blasting China for hitting back with retaliatory tariffs and repeating a call for the US Federal Reserve to cut interest rates. As Trump’s circle hit back at critics, White House trade adviser Peter Navarro said talk of a recession was “silly”. Hassett, director of the National Economic Council, said separately that Trump had talked to world leaders all weekend and would listen to proposals for great deals.

“He’s doubling down on something that he knows works, and he’s going to continue to do that,” he said on Fox News. “But he is also going to listen to our trading partners, and if they come to us with really great deals that advantage American manufacturing and American farmers, I’m sure he’ll listen.” The tariff announcement has met with bewildered condemnation from other leaders and triggered retaliatory levies from China, the world’s No 2 economy, which called Trump’s behavior “economic bullying”. After stocks in mainland China and Hong Kong cratered on Monday, China’s sovereign fund stepped in to try to stabilize the market.

Investors and political leaders have struggled to determine whether Trump’s tariffs are part of a permanent new regime or a negotiating tactic to win concessions from other countries. “We stand ready to negotiate with the US. Indeed, we have offered zero-for-zero tariffs for industrial goods as we have successfully done with many other trading partners” said the EU’s von der Leyen.– Agencies

Some in the EU worry that a forceful response risks even more blowback on European exporters of everything from French Cognac and Italian wine to German cars. Investors are now betting the growing risk of recession could see the US Federal Reserve cut rates as early as next month. Fed chief Jerome Powell has so far indicated he is in no rush though. – Agencies