Trump threatens more tariffs on China as global markets shudder over how much pain economy can take

Asked Monday if he would consider a pause on his widespread tariffs, Trump said, “We’re not looking at that.” The U.S. president said he was open to negotiations “if we can make a really fair deal and a good deal for the United States.” Trump added that it’s possible to have both negotiated settlements with other countries and permanent tariffs.

Even as Israeli Prime Minister Benjamin Netanyahu said his country would take its tariffs against U.S. goods to zero, Trump was noncommittal about removing the new import taxes placed on an ally. The White House also said Monday that Trump would veto a Senate bill that would mandate congressional approval for new tariffs, a bet that the critical mass of Republican lawmakers will loyally back him despite the economic and political risks.

However, there are signs of frustration even among Trump’s allies. Sen. John Kennedy, a Louisiana Republican, said he supports the president’s goals of better trade deals but worries about the economic uncertainty.

“We don’t know if the medicine will be worse than the disease,” Kennedy said, adding, “This is President Trump’s economy now.”

If Trump implements his new taxes on imports from China, U.S. tariffs on Chinese goods would reach a combined 104%. The new taxes would be on top of the 20% tariffs announced as punishment for fentanyl trafficking and his separate 34% 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.

China responded angrily and said it would not back down.

“The U.S. threat to escalate tariffs on China is a mistake on top of a mistake and once again exposes the blackmailing nature of the U.S.," said a statement from the Commerce Ministry in Beijing. "China will never accept this. If the U.S. insists on its own way, China will fight to the end.”

After sell-offs on the prior two days of trading, the Dow Jones Industrial Average on Monday fell 0.9%. The S&P 500 slumped 0.2%, and the Nasdaq composite was up 0.1%.

Trump frequently bragged about stock market gains during his first term, and the threat of losses on Wall Street was viewed as a potential guardrail on risky economic policies in his second term. But that hasn’t been the case, and Trump has described days of financial pain as necessary.

“I don’t mind going through it because I see a beautiful picture at the end,” he said.

Trump officials have frequently appeared on television to make the case for his policies, but none of their explanations have calmed the markets. The only improvement came from a false report that top economic adviser Kevin Hassett said Trump was considering a pause on all tariffs except for China. Stock prices spiked before the White House denied it was true by calling the post “fake news.”

The Republican president has remained defiant despite fears that he could be pushing the U.S. toward a recession, insisting that his tariffs are necessary for rebuilding domestic manufacturing and resetting trade relationships with other countries.

But his aggressive push has scrambled U.S. economic policy. Even though inflation remains elevated, Trump has called on the Federal Reserve to lower its benchmark interest rates that were increased to constrain price increases.

Federal Reserve Chair Jerome Powell warned Friday that the tariffs could increase inflation, and he said, "There’s a lot of waiting and seeing going on, including by us,” before any decisions would be made.

European Commission President Ursula von der Leyen said the European Union would focus on trade with other countries besides the United States, saying there are “vast opportunities” elsewhere.

Trump said he spoke with Japanese Prime Minister Shigeru Ishiba to start trade negotiations. He complained on Truth Social “they have treated the U.S. very poorly on Trade” and “they don’t take our cars, but we take MILLIONS of theirs.”

Ishiba said he told Trump that he's “strongly concerned” that tariffs would discourage investment from Japan, which has been the world’s biggest investor in the U.S. in the past five years. He described the situation as a “national crisis” and said his government would negotiate with Washington to urge Trump to reconsider the tariffs.

White House trade adviser Peter Navarro suggested countries would need to do much more than simply lower their own tariff rates to reach deals, an indication that talks could be a drawn-out process.

“Let’s take Vietnam," he said on CNBC. “When they come to us and say, ‘We’ll go to zero tariffs,’ that means nothing to us because it’s the non-tariff cheating that matters.”

Meeting with Trump at the White House on Monday, Netanyahu said his country would remove tariffs and other trade barriers in response to the U.S. placing 17% taxes on imports from Israel.

“Israel can serve as a model for many countries who ought to do the same,” Netanyahu told the U.S. president.

Trump said he appreciated “very much” what Netanyahu had said. But when asked if he would remove the tariffs, Trump said “maybe not” because of the aid that the United States provides to Israel. The U.S. had a $7.4 billion trade deficit in goods last year with Israel, according to the Census Bureau.

Trump has strived for a united front after the chaotic infighting of his first term. However, the economic turbulence has exposed some fractures among his supporters.

Bill Ackman, a hedge fund manager, assailed Commerce Secretary Howard Lutnick on Sunday as “indifferent to the stock market and the economy crashing.”

On Monday, Ackman apologized for his criticism claiming that Lutnick, previously the head of the financial firm Cantor Fitzgerald, could benefit from the tariffs because of its bond investments. But the hedge fund manager also reiterated his concerns about Trump’s tariffs.

“I am just frustrated watching what I believe to be a major policy error occur after our country and the president have been making huge economic progress that is now at risk due to the tariffs," he wrote on X.

Billionaire Elon Musk, a top adviser to Trump on overhauling the federal government, expressed skepticism about tariffs over the weekend. Musk has said that tariffs would drive up costs for Tesla, his electric automaker.

“I hope it is agreed that both Europe and the United States should move ideally in my view to a zero tariff situation, effectively creating a free trade zone between Europe and North America,” Musk said in a video conference with Italian politicians.

Navarro later told Fox News' “Sunday Morning Futures” that Musk “doesn’t understand” the situation.

“He sells cars,” Navarro said. “That’s what he does.” He added, “He’s simply protecting his own interests as any businessperson would do.”

___ Associated Press writers Didi Tang and Stephen Groves in Washington and Mari Yamaguchi in Tokyo contributed to this report.

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