Trump's trade wars deepen as China retaliates and markets fall. Here's what to know

NEW YORK (AP) — The trade wars launched by U.S. President Donald Trump have escalated to new heights.

Just days after Trump unveiled sweeping new "reciprocal" tariffs on imports from around the world, China on Friday levied a retaliatory 34% tariff on all U.S. products starting April 10. Stock markets worldwide plummeted, with the S&P 500 closing its worst week since COVID-19 upended the global economy in 2020.

Economists warn that the tariffs will raise the prices of products consumers buy each day — from the grocery aisle to car repairs. As businesses face higher costs, some say economies worldwide could see slowed hiring, layoffs and lower incomes down the road — heightening fears about future economic growth and widening inequality.

Meanwhile, Trump has doubled down on his commitment to tariffs, maintaining that his new levies will bring trillions of dollars of investment to the U.S. while also criticizing other countries' retaliatory measures.

Here's what we know about the latest developments.

What new tariffs did Trump announce this week?

Since taking office in January, Trump has rolled out several — and at times, on-and-off again — rounds of tariffs targeting particular countries and products. He's argued that raising import taxes will bring manufacturing back to the U.S. and protect domestic industries from unfair foreign competition.

None have been more sweeping than his long-threatened "reciprocal" tariffs unveiled on Wednesday.

The new tariffs will hike taxes on products imported from nearly all of America's trading partners — with Trump declaring a minimum tariff of 10% across the board and higher rates for dozens of nations that run trade surpluses with the U.S.

The steeper levies run as high as 50% — with the biggest "reciprocal" rates landing on small economies that trade little with the U.S., including the African kingdom of Lesotho. Other notable rates include a 20% tax on imports from the European Union, 25% on South Korea, 24% on Japan and 32% on Taiwan. The tariffs build on some of Trump's previous measures. His "reciprocal'' tariff of 34% on China, for example, builds on 20% levies imposed earlier this year.

How has China responded?

China on Friday announced a flurry of other retaliatory measures in addition to the planned 34% tariff on U.S. goods.

The Commerce Ministry in Beijing said it would impose more export controls on rare earths, which are materials used in high-tech products like computer chips and electric vehicle batteries. And China's customs administration said it had suspended imports of chicken from two U.S. suppliers, Mountaire Farms of Delaware and Coastal Processing.

China also filed a lawsuit with the World Trade Organization, saying the U.S. tariffs were “a typical unilateral bullying practice that endangers the stability of the global economic and trade order.”

Beijing also added 27 firms to lists of companies subject to trade sanctions or export controls.

The trade war between the U.S. and China isn't new. The two countries exchanged a series of tit-for-tat levies in recent months — on top of tariffs imposed during Trump's first term, many of which were preserved or added to under former President Joe Biden.

While China has taken the toughest approach so far, several countries signaled upcoming responses to Trump's "reciprocal" tariffs. The EU's European Commission is among those that have vowed to fight back while promising to improve the free trade rulebook. Others may be hoping to negotiate for relief. Trump said Friday that he had a "very productive call" with Vietnamese leader To Lam and claimed the country wants to eliminate its tariffs on U.S. goods if it can make a deal.

Is the stock market continuing to fall?

Yes. Trump's trade actions have roiled financial markets worldwide in recent months, and they careened even lower on Friday.

Wall Street's worst crisis since the COVID-19 crash deepened on Friday. Not even a better-than-expected U.S. jobs report, usually the economic highlight of each month, was enough to stop the slide. The S&P 500 tumbled 6% and the Dow Jones Industrial Average plunged 2,231 points, or 5.5%. The Nasdaq composite also dropped 5.8%

European stocks also saw some of the day’s biggest losses, with indexes sinking roughly 5%. The price of crude oil tumbled to its lowest level since 2021. Other basic building blocks for economic growth, such as copper, also saw prices slide on worries that the trade war will weaken the global economy.

What is Trump saying about all of this?

Trump has insisted he isn't changing his trade policies — describing them as a painful yet necessary step to encourage companies to relocate their operations to the U.S.

After stocks plunged on Thursday, he maintained that things are “going very well” and said both the markets and the country were “going to boom” from the tariffs.

Trump on Friday defended tariffs again on his social media platform Truth Social.

“IT’S ALREADY WORKING. HANG TOUGH, WE CAN’T LOSE!!!” he wrote.

Trump was swift to criticize Beijing’s move, claiming that China panicked and “PLAYED IT WRONG ... THE ONE THING THEY CANNOT AFFORD TO DO!”

Meanwhile, others continue to warn that the scale of Trump's tariffs could backfire. Federal Reserve Chair Jerome Powell said Friday that the tariffs were "significantly larger than expected" and are "highly likely" to cause more inflation — at least in the short term but possibly in the long term as well.

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AP Business Writers Paul Wiseman in Washington, Elaine Kurtenbach in Bangkok and Stan Choe in New York contributed to this report.