Washington (AFP) – Stock markets regained some ground Tuesday, even as trade tensions between the United States and China were strained by turmoil over President Donald Trump’s tariffs offensive.

The global economy has been rocked since sweeping 10 percent US tariffs took effect over the weekend, triggering a dramatic market sell-off worldwide and sparking recession fears.

Rates on imports to the United States from dozens of economies are set to rise further come 12.01 am (0401 GMT) Wednesday, with Chinese products facing a staggering 104 percent additional levy.

The new tariffs come following Beijing’s pushback against Trump, who remained defiant despite major US indexes slumping again Tuesday.

The US president believes his policy will revive America’s lost manufacturing base by forcing companies to relocate to the United States.

But many business experts and economists question how quickly this can take place, warning of higher inflation as the tariffs raise prices.

Trump originally unveiled a 34 percent additional tariff on Chinese goods.

But after China unveiled its own 34 percent counter tariff on American products, Trump vowed to pile on another 50 percent duty – bringing the additional rate on Chinese products to 104 percent, the White House confirmed.

Beijing earlier blasted what it called US blackmail and vowed to “fight it to the end.”

Trump insisted that the ball was in China’s court because Beijing “wants to make a deal, badly, but they don’t know how to get it started.”

Separately, Canada said that its tariffs on US auto imports will come into force Wednesday as well.

In the war of words, China also condemned remarks by Vice President JD Vance in which he said the United States had for too long borrowed money from “Chinese peasants.”

The European Union sought to cool tensions, with the bloc’s chief Ursula von der Leyen warning against worsening the trade conflict in a call with Chinese Premier Li Qiang.

She stressed stability for the world’s economy as well as “the need to avoid further escalation,” according to a readout from EU officials.

The Chinese premier told von der Leyen that his country could weather the storm, saying it “is fully confident of maintaining sustained and healthy economic development.”

China’s offshore yuan fell to an all-time low against the US dollar Tuesday, while oil prices slumped too with the West Texas Intermediate closing below $60 for the first time since April 2021.

The EU – which Trump has criticized bitterly over its tariff regime – may unveil its response next week to 20 percent levies it faces.

Underlining Trump’s willingness to negotiate, White House advisor Kevin Hassett told Fox News that the administration would prioritize allies like Japan and Korea among the dozens of nations wanting to cut deals.

The broad-based S&P 500 Index tumbled 1.6 percent and the tech-focused Nasdaq slid 2.3 percent.

Europe’s main indices finished with gains of more than two percent, while Asia’s leading indices also rose after heavy falls Monday.

In a public sign of friction, key Trump ally Elon Musk described senior White House trade advisor Peter Navarro as “dumber than a sack of bricks.”

Musk, who has signaled his opposition to the tariffs, hit out after Navarro described his Tesla company as “a car assembler” that wants cheap foreign parts.

Trump has ruled out any pause in his aggressive stance, despite China’s retaliation and criticism from within his Republican Party.

“Nearly 50 countries have approached me personally to discuss the president’s new policy and explore how to achieve reciprocity,” Trump’s top trade official told the Senate.

Countries including Argentina, Vietnam and Israel had offered to reduce their tariffs, Jamieson Greer said.