Asian and European markets battled on Tuesday, April 8, to recover from the previous day's significant drops fueled by uncertainty over tariffs imposed by US President Donald Trump. The tension escalated following Trump's threats of additional measures against China, which has vowed to "fight to the end," raising concerns about a spiraling trade war that risks dragging the global economy into recession.

Equities around the world have been adversely affected since Trump announced sweeping tariffs against a range of countries, disrupting established trading norms and wiping out trillions in company valuations. Despite this, investors sought to regain some footing, particularly in Tokyo, where the Nikkei index surged over 6%, recovering much of the sharp decline it experienced on Monday. This rebound followed a meeting between Japanese Prime Minister Shigeru Ishiba and Trump, stirring some hope in the market.

However, Trump's warning of potentially imposing an extra 50% tariffs in response to China's retaliation raised alarms about the possibility of a catastrophic standoff between the world's top two economies. Trump's remarks included a firm demand that Beijing not retaliate against his tariffs, a claim that China firmly rejected, with senior officials stating they would "never accept" such escalations and describing them as "a mistake on top of a mistake." Lin Jian, spokesman for China's Foreign Ministry, emphasized that if the US continues down this path, "China will definitely fight to the end."

While the uncertainty enveloping the markets weighs heavily, many traders took the opportunity to buy into beaten-down stocks. Nippon Steel shares jumped significantly after news broke of Trump reviewing a blocked takeover proposal of US Steel by its predecessor, Joe Biden. Hong Kong's Hang Seng Index climbed more than 2%, though it remained far from recovering the previous day's staggering 13% drop, the largest single-day retreat since 1997.

Chinese stocks in Shanghai gained 1.6% following the central bank's commitment to support the state investment fund, Central Huijin Investment, aiming to stabilize the capital market. Other markets also saw positive movement: Sydney and Mumbai increased by more than 2%, while Manila's stocks jumped by 3%. Conversely, trading in Taipei fell by more than 4%, extending a previous loss of nearly 10%.

The ongoing trade conflict is placing increased scrutiny on the US Federal Reserve, which is now deliberating whether to cut interest rates to bolster the economy or maintain them to contain inflation exacerbated by the tariffs. Analysts predict a shift in the Fed's stance towards more rate cuts through 2025 and 2026, depending on how the tariff landscape evolves.

For further details and ongoing coverage, visit Bangkok Post, Channel News Asia, and Le Monde.