Markets Sink as New Tariffs Take Hold

America is waking up Wednesday to the prospect of another wild day in the stock market, as the trade war spurred by the Trump administration's tariffs ramped up another notch. Earlier this month the president nixed the "de minimis" loophole for packages under $800 from China, and on Tuesday, Trump tripled the tariffs on those goods. Now, ahead of the next market opening in the US, the "worsening trade war ... has pushed US-China tensions to a new level of confrontation that analysts say is becoming increasingly difficult to de-escalate," reports the Washington Post.

• Next round: The so-called Liberation Day tariffs on almost 90 countries kicked in just after midnight, and China is taking an especially hard hit—a new round of tariffs brings the current penalty to 104% on all Chinese goods.

• Stocks: The New York Times reports that Asian markets "slumped" again on Wednesday at the latest development, as did early trading in Europe. A bear market is now hovering in the US over the S&P 500.
• Yields spike: Treasury yields are among the safest bets for investors, but things shifted Wednesday, with the yield on a 10-year Treasury note jumping as high as 4.516%, while the yield on a 30-year Treasury note spiked to 4.83%, reports MarketWatch. "Something has broken tonight in the bond market. We are seeing a disorderly liquidation," says Jim Bianco, president of Bianco Research. The US Treasury will be auctioning off $39 billion in 10-year securities on Wednesday.
• China's take: On Wednesday the Chinese State Council noted that it hoped the frayed relationship between the US and China could be mended "through dialogue and consultation," per the Post. "Success for China and the United States is an opportunity for both countries, not a threat," the agency said in a white paper. "We hope that the United States and China will meet each other halfway."

• White House response: Trump won't be picking up the phone first. "If China reaches out to make a deal, he'll be incredibly gracious, but he's going to do what's best for the American people," White House press secretary Karoline Leavitt said Tuesday. "China has to call first."
• Drugs next? On Tuesday evening, Trump suggested that prescription meds could be the next sector to enter the tariffs skirmish, revealing at a dinner for the National Republican Congressional Committee that "we're going to be announcing very shortly a major tariff on pharmaceuticals," per Politico. The Wall Street Journal notes that pharma stocks took a fall in European midday trading after his announcement, and in premarket trading on the US side.
• Market 'chaos': "Experts often caution that the stock market can be a misleading measure of the broader economy," the Times notes, but "sometimes ... the markets carry an economic message—and in recent days, they have been speaking unusually clearly." The paper adds that investors fear a continuing Trump-driven trade war will slow growth, drive up prices, and jump-start a worldwide recession.

(More tariffs stories.)