FTSE 100 live: EU pleads with China not to escalate trade war after new Trump tariff threat

China’s president Xi Jinping recently held a meeting with 40 leaders of multinational companies, including BMW and AstraZeneca.

In contrast to Donald Trump’s rhetoric, Xi told the top-level executives that globalisation was not going away. Xi is attempting to boost foreign investment in China, which has dropped in the last few years, and build new relationships that will offset Trump’s tariffs on many Chinese goods.

In the March 28 meeting, Xi “vowed to improve market access” and assured corporate leaders that “lines of communication” between them and the Chinese government are open.

China’s stocks also rallied slightly today, despite Donald Trump’s threat of a new 50 per cent levy on top of eye-wateringly high existing tariffs.

The country’s blue-chip CSI 300 climbed 1.7 per cent, while the Shanghai Composite Index closed up 1.6 per cent, according to Reuters.

European commission president Ursula von der Leyen has pleaded with China not to escalate the trade war with the US.

In a call with Chinese Premier Li Qiang, she called for “a negotiated resolution to the current situation, emphasising the need to avoid further escalation”, according to a statement released today.

She also stressed the responsibility that Europe and China have “to support a strong reformed trading system”.

The pair also discussed setting up a mechanism for tracking possible trade diversion.

Hong Kong’s Hang Seng index has closed slightly up following a sharp drop yesterday.

The index closed up 1.51 per cent on Tuesday after closing down more than 13 per cent on Monday in what was its steepest drop since the 1997 financial crisis.

If Donald Trump implements his new tariffs on Chinese products, US tariffs on Chinese goods would reach a combined 104 per cent.

The new taxes would be on top of the 20 per cent tariffs announced as punishment for fentanyl trafficking and his separate 34 per cent tariffs announced last week.

Not only could that increase prices for American consumers, it could also give China an incentive to flood other countries with cheaper goods and seek deeper relationships with other trading partners, particularly the European Union.

ECB’s policymaker Yannis Stournaras said today that an expected higher inflation and a global trade war following US president Donald Trump’s tariffs could delay normalisation of euro zone’s monetary policy.

Ireland’s EU commissioner Michael McGrath has said the bloc’s countries “still stand ready” to negotiate with the US.

The Commissioner for Justice, Rule of Law and Consumer Protection also said that the EU needed to respond and “create an incentive for the US to get around the table with us”.

The leaders of EU countries are due to vote on Tuesday on a package of counter measures responding to US tariffs on steel and aluminium already in effect.

A 20 per cent import tax will be slapped on EU goods on Wednesday as part of a major tariff announcement by US President Donald Trump last week.

The announcement has caused turmoil in the global markets as trading norms built up over decades are disrupted.

Mr McGrath said that the value of EU goods being hit by additional US tariffs is €380billion, generating €80billion in revenue for the US, up from the “normal” value of €7billion.

“Our strong preference is for negotiations with the US, we still stand ready to negotiate,” he told Newstalk Breakfast on Tuesday.

“We do wish to negotiate, it is our preference because we recognise that everyone loses when it comes to a trade war and the imposition of tariffs.”

My colleague Alisha Rahaman Sarkar reports:

South Korea’s trade minister has said the government has been considering measures to increase imports from the US as he headed to Washington to negotiate over US tariffs.

Minister Cheong In-kyo, who will meet US Trade Representative Jamieson Greer, said today that it was good news ahead of his visit that President Donald Trump said the door was open for talks over tariffs with nations other than China.

“It is difficult to reduce exports, so shouldn’t we then increase (US) imports? In that regard, we have been reviewing many different packages of measures to resolve the trade balance problem,” Cheong said, before flying to Washington.

He noted that the government had had internal discussions about increasing LNG imports from the United States.

Cheong added he will dispute Washington’s calculation of its 25 per cent tariff on South Korea, which he called “problematic” given the two countries’ existing free trade pact.