Anthony Albanese and Peter Dutton have begun making their election pitches to voters in the first leaders’ debate of the federal election campaign.

The pair are facing off on Tuesday evening at a “people’s forum” hosted by Sky News and the Daily Telegraph.

The debate is being held in western Sydney with both leaders to respond to questions from a group of undecided voters.

Mr Albanese was considered to have won the same contest against former prime minister Scott Morrison ahead of the 2022 election.

Sky News anchor Kieran Gilbert is moderating the debate, which is being broadcast live on the Sky News channel and website, and the Daily Telegraph website – a subscription is needed.

The second time the leaders will go head-to-head will be in mid-April on ABC News, to be hosted by Insiders host David Speers at the public broadcaster’s Parramatta studios.

Western Sydney is a key battleground for the two major parties, as Labor looks to win back the seat of Fowler from first-term independent Dai Le.

But Labor also faces new challenges from independent candidates from the city’s Muslim communities who feel angry and let down by the position taken by the government on the Israel-Gaza war.

The prime minister visited Sydney’s west as the first week of the campaign came to a close.

He has placed health front and centre of his bid for re-election on May 3.

The opposition leader has jumped on voter discontent with the nation’s housing crisis, making the Liberal Party’s case for the mortgage-belt seats where cost of living pressures are being profoundly felt.

Mr Dutton has pledged a 25 cents a litre cut to the price of petrol by halving the fuel excise for 12 months if the coalition is elected.

An ex-producer claims Seven made him into a scapegoat after authorising him to use a company credit card to pay for a pricey massage for Bruce Lehrmann. 

Taylor Auerbach is suing his former employer for defamation over claims Seven made disparaging comments about him that led him to be shunned and vilified. 

He was allowed to give last-minute evidence in a defamation case launched by Lehrmann against Network Ten and journalist Lisa Wilkinson over an interview with Brittany Higgins.

Auerbach said he discussed paying Lehrmann around $200,000 for an exclusive interview on Seven’s Spotlight, in which he would publicly respond to Ms Higgins’ allegations that he raped her in Parliament House.

Seven footed the bill for a $1000 Thai massage, luxury hotels, expensive dinners, and a golf trip in an attempt to induce Lehrmann to tell all, according to an affidavit from Auerbach. 

He claims he was defamed by Seven’s statements to media that he had not been authorised to use the company card to pay for the massage and had been forced to repay the charge.

Auerbach said the company “dissuaded” him from repayment and instead tasked him with withdrawing cash and offering a bonus to the massage provider to reverse the credit card charges. 

Contrary to Seven’s assertions that he was disciplined after the incident, Auerbach alleges he was offered inducements and told he would become Spotlight’s executive producer. 

A statement to Media Watch defamed him by implying he had been terminated by Seven as a result of the misuse of the corporate credit card, according to the statement of claim lodged with the Federal Court. 

Auerbach was not named in the statements from Seven, but he claims they “caused a tide of hatred and negativity” towards him.

He was working at Sky News at the time of the statements in March 2024, but blames his termination on his former employer’s allegedly defamatory statements.

In response to the explosive court documents released on Tuesday, Seven said it will “strenuously defend its position in this matter and is considering its options”. 

The latest limb of the Lehrmann saga comes as the former political staffer appeals his bruising Federal Court defamation defeat from April. 

He was ordered to pay $2 million in legal costs to Ten while the network has agreed to cover $1.15 million of Wilkinson’s bill.

Lehrmann continues to deny he sexually assaulted Ms Higgins and pleaded not guilty to sexual assault before his 2022 criminal trial in the ACT was derailed due to juror misconduct. 

The charges against him were dropped when prosecutors declined to pursue a retrial out of concern for Ms Higgins’ mental health.

Queensland’s government looks set to abandon legislated emissions reduction targets after flagging reviews and the extension of coal mining.

Treasurer and Energy Minister David Janetzki has outlined the Liberal National Party government’s energy road map, involving a five-year plan to be delivered by the end of 2025.

Speaking to the Queensland Energy Club on Tuesday, Mr Janetzki ranged across mining, gas, renewable energy and private-sector engagement to deliver projects.

He proposed an expansion of gas exploration and the repeal of current renewable energy targets, which he described as “unachievable”, and later told reporters that emissions target legislation will be reviewed.

A vision towards 50 per cent emissions reduction targets by 2030, and 75 per cent by 2035, were enshrined by the previous state government in 2024.

The laws also locked in an 80 per cent renewable energy generation target by 2035, and entrenched public ownership of energy assets.

The LNP government says it is committed to net zero by 2050.

“We’ve committed to repeal the renewable energy targets,” Mr Janetzki said.

“The legislation, which both contains the emissions and renewables targets, will be reviewed during the course of the year as we develop the energy road map.”

Mr Janetzki also announced the state-owned Callide B coal-fired power station will operate past its technical end of life.

The treasurer said coal-fired power accounts for more than 60 per cent of the electricity generated in Queensland, with the state boasting the youngest fleet in Australia.

He flagged that coal-fired plants will not be closed just to meet the needs of a “media release or brochure”.

“This will be done very methodically and calmly and that review will be undertaken during the course of the year,” he said.

“There will be coal generators that operate beyond 2035.”

Environmental lobbyists have slammed proposed gas exploration and the Callide B decision.

“Supporting an expansion of the gas industry will only benefit huge multinational petroleum companies, and leave ordinary Queenslanders worse off,” Lock the Gate’s Ellen Roberts said.

Extending Callide B’s working life could cost up to $420 million and expose people to higher risks of outages and pollution, Queensland Conservation Council’s Dave Copeman said.

A key energy project to connect multiple regions has meanwhile suffered another cost blowout, to more than double its original estimate.

CopperString, originally slated at $5 billion, will connect Queensland’s northwest to the grid through an 840km power line running from south of Townsville to Mount Isa.

After winning the 2024 election, the new government announced that the cost of CopperString had increased to $9 billion after receiving internal briefing documents.

It has now risen again to $13.9 billion, following a closer examination of the project and consultation with transmission operator Powerlink.

The Australian share market has rebounded in its biggest daily gain of 2025, but the recovery could sink under the weight of trade war uncertainty.

The S&P/ASX200 rose 166.7 points, or 2.27 per cent, to 7,510.0 on Tuesday, while the broader All Ordinaries gained 180.1 points, or 2.39 per cent, to 7,704.4.

The benchmark index recovered less than one-third of 7.6 per cent sell-off over the last three sessions, prompted by US President Trump’s ‘Liberation Day’ tariffs announced last week.

“Australian shares rebounded on Tuesday, buoyed by gains in energy and technology stocks,” CommSec chief economist Ryan Felsman said.

“While investors saw relief in Federal Treasurer Jim Chalmers’ remarks that resource-rich Australia will be able to manage the direct impact of US President Donald Trump’s sweeping tariffs.”

All 11 sectors finished in the green, led by a 4.8 per cent rally in IT stocks.

Energy stocks rose 3.5 per cent after tumbling almost 15 per cent over the previous two sessions, with the oil price on Friday falling to three-year lows.

Brent crude has rebounded more than three per cent since last week to $US64.79, but tit-for-tat trade war escalations between China and the US are capping the recovery.

Mr Trump has vowed to increase duties on Chinese imports to above 100 per cent, in response to China’s retaliatory 34 per cent tariff on US goods.

Beijing has vowed to “fight to the end” any further escalation from the US.

Materials and financial stocks helped lift the local bourse, with materials up 2.4 per cent and two per cent respectively.

The Commonwealth Bank was leading the big four, clawing back 2.8 per cent after plummeting more than six per cent on Monday.

Consumer discretionary stocks also rallied, up 3.2 per cent as Bunnings owner Wesfarmers shot up nearly three per cent after falling 8.9 per cent since Mr Trump’s tariff announcement.

Westpac’s consumer sentiment survey released on Tuesday showed confidence fell six per cent in April.

With tariff negotiations in their infancy and post-Liberation Day economic indicators still weeks away, it could be a while before markets show signs of a sustained recovery. 

Tiger Brokers chief strategy officer Greg Boland said spikes such that overnight in the US volatility index sometimes provided buying signals, but investors would have to watch closely for further signs of a solid turnaround.

“I think if the markets don’t recover reasonably quickly, then we’ll fall further in terms of equities,” Mr Boland told AAP.

The Australian dollar has also rebounded to buy 60.59 US cents, up from 60.14 US cents on Monday at 5pm.

The Aussie has sold off more than any other major currency since the US tariffs were announced on April 2.

ON THE ASX:

* The benchmark S&P/ASX200 index rose 166.7 points, or 2.27 per cent, to 7,510.0 on Tuesday

* The broader All Ordinaries gained 180.1 points, or 2.39 per cent, to 7,704.4

CURRENCY SNAPSHOT:

One Australian dollar buys:

* 60.59 US cents, from 60.14 US cents on Monday

* 89.20 Japanese yen, from 87.38 Japanese yen

* 55.20 euro cents, from 54.65 euro cents

* 47.41 British pence, from 46.61 British pence

* 107.98 NZ cents, from 108.02 NZ cents

China has vowed to “fight to the end” if US President Donald Trump follows through on a threatened 50 per cent tariff hike, rejecting calls to drop its countermeasures and setting the stage for a high-stakes standoff between the world’s top two economies.

If neither side blinks and Trump sticks to his plans, total new levies could climb to 104 per cent this year on Chinese goods imported into the United States, escalating a trade war that has already spurred the biggest market losses since the pandemic.

But with Trump’s previous tariff increases already squeezing Chinese exporters’ margins to the point of suffocation, further hikes would only serve to underscore Washington’s appetite for brinkmanship and its desire to cut China out of the world’s biggest consumer market as a matter of principle, analysts say.

“The US side’s threat to escalate tariffs against China is a mistake on top of a mistake, once again exposing the American side’s blackmailing nature,” China’s commerce ministry said in a statement on Tuesday.

“If the US insists on having its way, China will fight to the end.”

Trump said he would impose the additional 50 per cent duty on US imports from China on Wednesday if Beijing did not withdraw the 34 per cent tariffs it had imposed on US products last week.

Those Chinese tariffs, in turn, had come in response to 34 per cent “reciprocal” duties announced by Trump.

The average US tariff on Chinese goods is already set to climb to 76 per cent following Trump’s levies last week, which hit China with a tariff of 34 per cent, in addition to 20 per cent he previously imposed this year.

“If the tariffs keep going up and up, it becomes a battle of wills and principles rather than economics,” said Xu Tianchen, senior economist for China at the Economist Intelligence Unit.

“Since China already faces a tariff rate in excess of 60 per cent, it doesn’t matter if it goes up by 50 per cent or 500 per cent,” he added.

The moves have led economists to question whether the White House stands to gain much from hiking rates further.

China has stepped up efforts to shield its economy from global market turmoil following Trump’s “Liberation Day” announcement, with several state holding companies committing to increase share investment, a slew of listed companies announcing buybacks, and the central bank pledging liquidity support for fund Central Huijin after it intervened to support sinking stocks.

But there is no shying away from the fact that Trump’s affinity for tariffs risks de-railing the largely export-led economic recovery that has been underway in China since the end of the COVID pandemic, unless exporters can pivot quickly to other markets.

“Once its passed the 35 per cent mark, the tariffs actually already wipe out the entire profit of the export sector,” said Dan Wang, director, China, at Eurasia Group.

“After that, China shouldn’t export to the US at all. It could be 1000 per cent, but since there is no trade, there is no harm.”

“Europe is and will be the most profitable market for China now,” she added.

President Xi Jinping is expected to meet Spain’s Prime Minister on Friday, with finding a resolution to trade tensions between Beijing and Brussels over China’s electric vehicle exports likely on the agenda, along with Trump’s broader tariff onslaught.

The Chinese leader will then visit Malaysia, Vietnam and Cambodia, three economies that gained from Chinese manufacturers relocating to avoid US sanctions during Trump’s first term but which now face steep levies of their own.

Odds are shortening for the Reserve Bank to cut rates by 50 basis points at its next meeting as global financial turmoil weighs heavily on Australians.

Though most economists do not view an Australian recession as a realistic chance, the prospect of lower growth and higher unemployment as a result of US President Donald Trump’s tariffs has raised expectations of an outsized RBA cut.

Deutsche Bank on Tuesday became the first major bank to tip Australia’s central bank to lower rates by half a percentage point in May.

Australia is relatively well-positioned to weather the direct impact of US tariffs, but is vulnerable to a slowdown in key trading partners in Asia, especially China, said chief economist Phil O’Donaghoe.

“An aggressive RBA response is appropriate, and consistent with precedent,” he said.

Markets have priced in the chance of a 50 basis point cut at 96 per cent.

Opposition Leader Peter Dutton attacked Treasurer Jim Chalmers for pointing this out, as the coalition tries to position itself as a superior economic manager in a time of economic uncertainty.

“The Treasurer is out there talking about a 50-point reduction in interest rates, which means, obviously, that he sees a recession coming for our economy,” Mr Dutton said.

“He wouldn’t be talking about 50 points as a reduction next month if he didn’t believe that there was going to be a significant souring of the Australian economy on his watch.”

Dr Chalmers’ comments on Monday were in the context of market pricing and he was at pains to point out it was neither a prediction nor a suggestion of his own.

Updated Treasury forecasts did not predict a recession in Australia and growth was actually set to accelerate over the coming years, he added.

Mr Dutton said Prime Minister Anthony Albanese was out of his depth when it comes to managing the economy.

“As we get closer to the election, I think Australians will continue to focus on who is better able to manage the economy, and therefore to manage the cost-of-living crisis that Labor has created,” he said.

Mr Dutton cannot rely on the traditional assumption that the Liberals are superior economic managers, with a recent survey by pollster Redbridge finding 31 per cent of respondents thought Labor’s economic vision was better for the nation.

This compared with 29 per cent of survey respondents who thought the coalition had a superior plan, according to the Redbridge polling.

The prime minister hopes incumbency works to his advantage in uncertain times, arguing the coalition’s plans to cut spending would make things worse.

At a press conference in Sydney, Mr Albanese danced around the ‘r-word’ when asked if he would explicitly rule out a recession.

“We have, as a government, continued to see the economy grow,” he said.

Overnight, Mr Trump threatened an extra 50 per cent tariff on imports from China, unless it withdrew the 34 per cent duty it set on US goods last week.

This prompted another sell-off on Wall Street, and some major investment banks say a recession in the US is now more likely than not.

Global turmoil is already impacting the confidence of Australian households, with Westpac’s consumer sentiment index falling six per cent in April.

Economists Greg Jericho and Stephen Koukoulas and Greens senator Nick McKim called for the RBA to use its powers to convene an emergency meeting and cut rates immediately.

“People are hurting already, and every week of delay increases the risk of a recession which will hurt Australians even more,” Senator McKim said.

Under the Reserve Bank Act, the chair of the Monetary Policy Board – which is the central bank’s governor Michele Bullock – may convene a meeting at any time.

Asked if Ms Bullock was considering calling an early rates meeting, an RBA spokesperson said the bank was watching developments closely and continued to prepare for the May 19-20 meeting.

The first leaders’ debate is not the only thing looming large over the federal election, as party leaders stress they’re the best placed to navigate global economic uncertainty caused by Donald Trump.

As Anthony Albanese and Peter Dutton prepare to face 100 undecided voters at a Sky News forum in western Sydney on Tuesday, both candidates sought to pitch themselves as the safest pair of hands to navigate headwinds amid recession fears.

The prime minister said while the domestic economy has turned a corner in recent months, the risks in global markets mean it’s not the time for a change in government.

“We’re not immune from the impacts of the global economy, but what we have shown consistently is the preparedness to act for the times, to provide support for people,” he told reporters in Sydney on Tuesday.

“We are in uncertain times, but I’m absolutely certain this is not the time to cut … now is the time to manage the economy responsibly.”

But Mr Dutton said predictions of a 50 basis point cut in interest rates meant turbulent economic conditions lay ahead and voters needed certainty.

He argued the previous coalition government’s management of the economy during the COVID-19 pandemic was an indicator of how it would deal with future issues.

“We have strong and competent managers of the economy, and we can achieve that after the election with a change of government,” Mr Dutton said.

“The prime minister, of course, is completely out of his depth when it comes to economics and how to manage the economy, and he’s demonstrated that in subsequent budgets.”

Both leaders were asked if they could guarantee a recession would not happen under their watch, but neither ruled out the possibility.

The prime minister said budget repair work was well under way, while Mr Dutton said households had already been in a recession for the past two years.

Ahead of the debate, the prime minister and opposition leader also jostled for position about how to deal with the Trump administration following the tariffs.

While the decision by the US president to impose 10 per cent tariffs on Australian exports did not make sense, the government was dealing with it responsibly, Mr Albanese said.

“Because (the US is) the world’s largest economy, (tariffs have) implications for the global economy,” Mr Albanese added.

“What we are doing is preparing for that. We want to make sure that … the impact of this is minimised.”

But Mr Dutton said any implications in the US would flow on to Australia’s economy.

“If we see further actions out of the US, or retaliatory action from China or other countries, then there is a very significant chance of a recession in the US, of a global recession otherwise, and those waves, huge tsunami waves will hit our shores in no time at all,” he said.

However, internal Labor polling showed 74 per cent of those surveyed thought Mr Dutton would not have been able to negotiate a better deal for Australia with the US president.

The latest Newspoll showed Labor stretching ahead, leading 52 to 48 per cent on a two-party preferred basis.

A separate Roy Morgan poll suggested Labor was on track to be re-elected with an increased majority, leading 53.5 to 46.5 per cent.

But the outcome remains far from certain with a hung parliament still in play.

Asian stocks bounced off 18-month lows and US stock futures pointed higher on Tuesday, as markets caught their breath after recent heavy selling on hopes that Washington might be willing to negotiate some of its aggressive tariffs.

US Treasury yields continued their ascent from six-month lows, gold hovered close to a two-and-a-half–week low and crude oil recovered from a nearly four-year low, as traders began shifting back to riskier assets from traditional safe havens.

A 5.6 per cent rebound in Japan’s Nikkei far outpaced other regional markets, with Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer tasked with leading trade negotiations with Tokyo.

US business leaders have also begun speaking out about the damage to the economy and financial markets that could be wrought by President Donald Trump’s global trade war, with JPMorgan Chase CEO Jamie Dimon warning on Monday of inflation and a US slowdown.

However, Trump dug in his heels over China, vowing additional 50 per cent levies if Beijing does not withdraw retaliatory tariffs on the United States. Beijing said on Tuesday it will never accept the “blackmail nature” of US tariff threats.

Even so, Hong Kong’s Hang Seng climbed 1.7 per cent in early trading. Mainland Chinese blue chips added 0.6 per cent.

The Chinese yuan weakened to 7.36 per dollar in the offshore market, the weakest in two months.

“Importantly, a little ray of sunshine is starting to emerge that gives hope that the US is genuinely open to trade negotiations, … the most significant being Japan with Treasury Secretary Bessent,” said Tapas Strickland, head of market economics at National Australia Bank.

Strickland, however, noted volatility remains extremely elevated, with the “rare event” of the VIX index spiking as high as 60 overnight.

South Korea’s KOSPI added 1.3 per cent and Australia’s equity benchmark gained 1.0 per cent.

Taiwan’s equity benchmark though sank 3.0 per cent, following its worst day ever on Monday, when it tumbled 10 per cent. The major semiconductor producer faces a 32 per cent duty from Washington.

Pan-European STOXX 50 futures rallied 2.2 per cent.

US S&P 500 futures rose 0.9 per cent, after the cash index ended a wild session with a 0.2 per cent loss on Monday.

Wall Street swung between heavy losses and gains throughout the session as investors were whiplashed by tariff headlines. A media report claiming Trump was considering a 90-day pause in duties for all countries except China briefly turned US stocks positive early in the session, but it was quashed by the White House as “fake news.”

“The signs are there that if the market hears what it wants to hear then risky assets could explode higher,” said Chris Weston, head of research at Pepperstone.

“However, the net effect of the news on the day was hardly positive, and the headlines that the market really wanted to believe to be true proved to be false,” he said.

“I’d argue what played out was more in fitting with a bear market rally and one that traders should look to fade, rather than believing we’ve reached a key inflection point for a sustained trend higher.”

The 10-year Treasury yield rose as much as 6 basis points (bps) to 4.216 per cent on Tuesday, after jumping some 17 bps on Monday as it bounced from six-month lows.

That helped wrench Japanese government bond yields off their own multi-month lows, with the 10-year yield up 12.5 bps to 1.235 per cent.

The US dollar edged lower against a basket of six major peers, but that followed a two-day 1.2 per cent advance from a six-month trough.

The dollar eased 0.06 per cent to 147.70 yen.

The euro jumped 0.4 per cent to $US1.0944 ($A1.8079), and sterling climbed 0.3 per cent to $US1.2762 ($A2.1083).

The European Commission said on Monday it had offered a “zero-for-zero” tariff deal to avert a trade war with the United States as EU ministers agreed to prioritise negotiations, while also striking back with 25 per cent tariffs on some US imports.

The risk-sensitive Australian dollar added 0.2 per cent to $US0.6001 ($A0.9914).

Gold was steady at around $US2,985 ($A4,931) per ounce, but well back from last Thursday’s record peak at $US3,167.57 ($A5,232.80), reached in the immediate aftermath of Trump’s “Liberation Day” tariff announcement.

Crude oil strongly rebounded after it fell to nearly four-year lows on Monday.

Brent futures were up 1.26 per cent at $US65.02 ($A107.41) per barrel, while US West Texas Intermediate crude futures rose 1.52 per cent to $US61.61 ($A101.78).

Australian shares have rebounded after a bloody start to the week, but a wild overnight session on Wall Street indicates volatility could be here to stay.

The S&P/ASX200 was up 37.6  points, or 0.51 per cent in early trading, to 7380.9, as the broader All Ordinaries lifted 56.8 points, or 0.75 per cent, to 7581.

The rebound on Tuesday came after two indexes plummeted more than 4.1 per cent each on Monday, erasing $109 billion from the top 500 stocks.

Wall Street closed mostly lower overnight with the S&P500 giving away 0.23 per cent after a wild, short-lived, three per cent rally on false news of a delay of US tariff implementation.

“Contrasting tariff messages caused wild swings in equity markets overnight, with European indexes sharply lower,” ANZ analysts wrote in a research note.

“The market briefly thought there would be a 90-day pause on tariff implementation, but this was denied.”

US President Donald Trump has threatened to impose an extra 50 per cent tariff on goods from China unless it retracts its 34 per cent retaliatory impost on US goods.

The market response to the move has been mixed after Mr Trump also invited trade partners to negotiate, increasing the likelihood the tariffs have room to move.

Six of 11 local sectors were trading higher by 11am AEST, with real estate leading losses, down 0.34 per cent.

IT stocks led the gains, up 2.4 per cent, followed by consumer discretionary stocks, which were up two per cent.

Monday’s heavy losses in energy stocks and materials had narrowed slightly, up two per cent and 1.5 per cent.

Financials were trading slightly lower, down 0.4 per cent after tanking 4.8 per cent on Monday.

Oil prices have rebounded slightly, but remain at three-year lows as global growth forecasts shrink crude demand expectations, with Brent trading just above $US65 a barrel.

Ongoing uncertainty in markets would likely cause volatility for some time to come, Moomoo market strategist Jessica Amir said.

“Investors that are not into riding roller coasters should sit back until May or June, which is how long US Treasury Secretary Scott Bessent said tariff negotiations could take,” Ms Amir said.

“While they are sitting on a big cash pile, investors need to see certainty before they’ll ‘buy the dip’.”

Gold was down for a third straight session, losing 2.4 per cent to $US2,963.19 per ounce.

The Australian dollar, which has plummeted more than five per cent since the “Liberation Day” tariffs were announced, is holding above 60 US cents after consolidating below the psychological level for most of the night.

The Aussie is buying 60.06 US cents, down from 60.14 US cents on Monday at 5pm.

A global trade war touched off by Donald Trump’s sweeping tariffs has escalated further, as the US president threatened to increase duties on China and the European Union proposed counter-tariffs of its own. 

Financial markets across the globe posted a third day of losses on Monday as investors worried that steep trade barriers around the world’s largest consumer market could lead to a recession. The S&P 500 closed lower after a rollercoaster session in which it touched its lowest level in more than a year.

Trump said the tariffs – a minimum of 10 per cent for all US imports, with targeted rates of up to 50 per cent – would help the United States recapture an industrial base that he says has withered over decades of trade liberalisation.

“It’s the only chance our country will have to reset the table. Because no other president would be willing to do what I’m doing, or to even go through it,” he told reporters at the White House. 

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

Trump spoke hours after he ratcheted up a confrontation with China, the world’s No. 2 economy.

Trump said he would impose an additional 50 per cent duty on US imports from China on Wednesday if it did not withdraw the 34 per cent tariffs it had imposed on US products last week. Those Chinese tariffs had come in response to 34 per cent “reciprocal” duties announced by Trump.

Beijing responded with defiance. Trump’s threat was a “typical move of unilateralism, protectionism and economic bullying,” Chinese embassy spokesperson Liu Pengyu said.

The European Commission, meanwhile, proposed counter-tariffs of 25 per cent on a range of US goods, including soybeans, nuts and sausages, though other potential items like bourbon whiskey were left off the list, according to a document seen by Reuters.

Officials said they stood ready to negotiate a “zero for zero” deal with Trump’s administration. “Sooner or later, we will sit at the negotiation table with the US and find a mutually acceptable compromise,” EU Trade Commissioner Maros Sefcovic said at a news conference.

The 27-member bloc is struggling with tariffs on autos and metals already in place, and faces a 20 per cent tariff on other products on Wednesday. Trump has also threatened to slap tariffs on EU alcoholic drinks.

Trump administration officials say the president is following through on a promise to reverse decades of trade liberalisation that he believes has undercut the US economy.

Wall Street leaders issued warnings on US tariffs, with JPMorgan Chase CEO Jamie Dimon saying they could have lasting negative consequences, while fund manager Bill Ackman said they could lead to an “economic nuclear winter”. 

Ackman is one of a handful of Trump supporters who questioned the strategy. Billionaire Elon Musk, who is leading Trump’s effort to slash government spending, called for zero tariffs between the US and Europe over the weekend.

Investors and political leaders have struggled to determine whether Trump’s tariffs are permanent or a pressure tactic to win concessions from other countries. Some in the EU worry that a forceful response risks even more blowback on European exporters of everything from French cognac and Italian wine to German cars. 

Some governments in Asia have signalled a willingness to engage. Taiwanese President Lai Ching-te on Sunday offered zero tariffs as the basis for talks, while an Indian government official said Delhi does not plan to retaliate. 

with DPA and Reuters