Trump's tariff 'medicine' injects turmoil into global markets

U.S. President Donald Trump warned foreign governments they would have to pay "a lot of money" to lift sweeping tariffs, characterising the duties as "medicine" and triggering further carnage across global financial markets on Monday.

Asian shares sank across the board and U.S. stock market futures traded sharply lower as investors feared that Trump's tariffs could lead to higher prices, weaker demand and potentially a global recession.

Speaking to reporters aboard Air Force One on Sunday, Trump indicated he was not concerned about losses that have already wiped out trillions of dollars in value from equity markets around the world.

"I don't want anything to go down. But sometimes you have to take medicine to fix something," he said as he returned from a weekend of golf in Florida.

Trump said he had spoken to leaders from Europe and Asia over the weekend, who hope to convince him to lower tariffs as high as 50% due to take effect this week.

"They are coming to the table. They want to talk but there's no talk unless they pay us a lot of money on a yearly basis," Trump said.

Trump's barrage of tariffs announced last week was met with bewildered condemnation from other leaders and triggered retaliatory levies from China, the world's No.2 economy.

Billionaire fund manager Bill Ackman, who endorsed Trump's run for president, called for the tariffs to be paused to avert an "economic nuclear war".

Investors and political leaders have struggled to determine whether Trump's tariffs are part of a permanent new regime or a negotiating tactic to win concessions from other countries.

On Sunday morning talk shows, Trump's top economic advisers sought to portray the tariffs as a savvy repositioning of the U.S. in the global trade order.

Treasury Secretary Scott Bessent said more than 50 nations had started negotiations with the U.S. since last Wednesday's announcement. Commerce Secretary Howard Lutnick said the tariffs would remain in place "for days and weeks."

Japan, one of Washington's closest allies in Asia, is among countries hoping to strike some deal but its leader Shigeru Ishiba said on Monday results "won't come overnight".

Investors, however, are not hanging around.

As Ishiba spoke in parliament, Tokyo's Nikkei .N225 plunged to a 1-1/2-year low, led by the country's banks - some of the world's largest lenders by assets - which have shed almost a quarter of their market value over the last three trading days.

The broad market sell-off seen on Monday - which also saw global oil prices dive - comes as investors wagered that the mounting risk of recession could see U.S. interest rates cut as early as May.

White House economic adviser Kevin Hassett sought to tamp down concerns that the tariffs were part of a strategy to pressure the U.S. Federal Reserve to lower interest rates, saying there would be no "political coercion" of the central bank.

JPMorgan economists now estimate the tariffs will see full-year U.S. gross domestic product (GDP) decline by 0.3%, down from an earlier estimate of 1.3% growth.

Goldman Sachs said the tariffs could lower GDP growth in China by at least 0.7% percentage points this year and accelerate fiscal easing.

The two Wall Street banks now see the risk of a global recession at 60% and 45%, respectively.

That uncertainty has clouded the outlook for global policymakers. The Reserve Bank of New Zealand, the first major central bank to meet since Trump's tariff bombshell, is due to cut rates on Tuesday in what economists say could be the first of several this year.

TARIFF DEALMAKING

U.S. customs agents began collecting Trump's unilateral 10% tariff on all imports from many countries on Saturday. Higher "reciprocal" tariff rates of 11% to 50% on individual countries are due to take effect on Wednesday at 12:01 a.m. EDT (4:01 a.m. GMT).

Some other governments have already signaled a willingness to engage with the U.S. to avoid the duties.

Taiwan's President Lai Ching-te on Sunday offered zero tariffs as the basis for talks with the U.S., pledging to remove trade barriers and saying Taiwanese companies will raise their U.S. investments.

Israeli Prime Minister Benjamin Netanyahu said he would seek a reprieve from a 17% tariff on the country's goods during a planned meeting with Trump on Monday.

An Indian government official told Reuters the country does not plan to retaliate against a 26% tariff and said talks were under way with the U.S. over a possible deal.

Vietnamese leader To Lam agreed in a phone call with Trump on Friday to discuss a deal to remove tariffs after the Southeast Asian manufacturing hub was slapped with some of the highest duties globally.

Trump called the discussion "very productive".