European markets hold on to early gains and major Asian markets recover slightly following days of losses in the wake of Donald Trump's tariffs
The UK's FTSE 100 opens 1% up, with France's Cac 40 index up 1.8% and Germany's Dax opening 1.3% higher
China says it will "fight to the end" after Trump threatened to hit Beijing with an extra 50% tariff if it doesn't withdraw its retaliatory levy on Tuesday
Beijing's commerce ministry accuses the Trump administration of blackmail and says his tariffs are "a typical unilateral bullying practice"
The new tariffs could leave some US companies bringing in certain goods from China facing a 104% tax – here's a timeline of how the tit-for-tat tariffs have unfolded
Trump appears locked in a high-stakes game of chicken, with the world's economy hanging in the balance, writes Anthony Zurcher
Edited by Marita Moloney and Jamie Whitehead
Graham Fraser
Technology reporter
A deal over the future of TikTok may have been one of the first casualties of this new, more intense phase of the US-China trade war.
The US has passed a law which says the hugely popular video sharing app has to either sell its US operation or be banned. The deadline was last Saturday.
It seems a deal was nearly finalised on Wednesday last week but fell apart after Trump, on the same day, announced sweeping global tariffs – including on China.
Representatives of ByteDance, TikTok's Chinese owners, contacted the White House to inform them China would no longer approve the deal unless negotiations on the tariffs could take place, a source familiar with the deal told CBS News, the BBC's US partner.
The deal was off – and President Trump extended the deadline for a deal by 75 days.
What could happen next? Well, if a week is a long time in politics, then 10 weeks is an absolute age.
With Washington and Beijing exchanging more threats and defiant rhetoric, it may be that no agreement over TikTok's future will prove to be the one of the first real world consequences of these new tariffs.ment over TikTok's future will prove to be the one of the first real world consequences of the tariff war.
Nick Edser
Business reporter
Time for a quick recap of how stocks in Europe are doing, and so far the markets have hung on to their early gains.
Russ Mould, investment director at AJ Bell, says the gains, coupled with rises in Asia and a better end to the day in the US on Monday, suggest "investors are slowly regaining confidence".
This might be in the belief that "an actual breakthrough on tariffs – either a temporary pause or positive negotiations – could unleash the mother of all rebound rallies".
However, it’s "dangerous to think a massive rally will definitely happen," he adds.
“Markets could stay fragile for days and weeks to come. It would only take a new sign of aggression from Trump or a trading partner fighting back hard to cause upset again," he says.
The chief executive of a steel company in the US tells the BBC World Service she is "very grateful" for Trump's 25% tariffs on imported steel.
Hollie Noveletsky, CEO of Novel Iron Works, tells Newsday a "significant influx" of foreign steel "dumped below prices" has "distorted" the market.
She says companies like hers in the US pay $30 plus an hour for a welder, but she says in Mexico they are paying $1.75.
"You can't compete with that," she says, adding many companies in her industry have gone out of business.
The first Trump administration also brought in tariffs on steel, but she says they "found very quickly that foreign countries knew how to circumvent" those.
On Monday, Hong Kong's major stock market was shocked by a steep drop of 13.2%
China and Hong Kong stocks recovered a bit of ground on Tuesday, with China’s blue-chip CSI 300 climbing 1.7% and the Shanghai Composite Index regaining 1.6% at close.
Both fell by more than 7% on Monday.
Hong Kong's Hang Seng Index closed on Tuesday, up 1.5% following Monday's sharp drop of 13.2%, it’s steepest drop since the financial crisis of 1997.
Stocks in Indonesia were down nearly 8% at close.
The fall came amidst US president Donald Trump's implementation of significant global tariffs, with threats of further reciprocal tariffs set to be imposed on Wednesday.
We're just getting details of a phone call held between EU chief Ursula von der Leyen and Chinese Premier Li Qiang today.
According to a read-out published by von der Leyen's office, the European Commission president "stressed the responsibility of Europe and China… to support a strong reformed trading system, free, fair and founded on a level playing field".
She also called for a "negotiated resolution" and emphasised the "need to avoid further escalation", the statement says.
As a reminder, China has promised countermeasures against Trump's tariffs, with the US president in turn threatening additional 50% tariffs on top of the taxes already announced if Beijing does not walk back.
Yesterday, von der Leyen said the EU had offered "zero-for-zero" tariffs for industrial goods it exports to the US, adding that the EU was "always ready for a good deal".
Indonesia plans to buy some products from the US as part of its negotiation efforts
We've reported a lot on how China is reacting to Trump's trade taxes with countermeasures of its own.
But how are other nations across Asia taking it all?
Indonesia, with tariffs at 32%, says it plans to buy petrol, natural gas and soybeans from the US as part of negotiation efforts. The government says it may look to other nations – Vietnam, Thailand, Bangladesh and China – to replace any US exports.
Sri Lanka, with some of the highest rates of tariffs at 44%, says its president has written to Trump and they are due to have a meeting later on Tuesday.
South Korea, which faces 26% tariffs, says it will monitor how other countries respond to their new levies before preparing its negotiation strategy, as the government prepares support measures.
Singapore's prime minister says 10% tariffs on the city-state from the US are "not actions one does to a friend". Lawrence Wong told parliament under a free trade deal with the US, Singapore imposes zero tariffs on American goods and also runs a trade deficit with Washington.
Taiwan, on Trump's "worst offender" list with a tariff rate of 32%, says it is open to negotiations with the US at any time.
Stock markets in Europe opened this morning slightly higher after the falls experienced in recent days. If you are just joining us, here is a quick recap:
The US tariffs on China could cause a problem in the long run to UK firms who currently import goods from aboard, according to the boss of Buy It Direct Group, an online discounter which sources a significant share of its products from China.
Chief executive Nick Glynne tells the BBC’s Today programme that if Chinese firms stop or reduce exports to the US, "the big long-term threat is to accelerate what’s already been happening in the UK, which is Chinese manufacturers selling over the head of importers… and selling directly to UK consumers".
"At the moment there are three million commercial parcels a week that go directly to UK consumers from China," he says.
However, Glynne says Chinese firms have much cheaper shipping rates, and by posting direct can bypass duty, packaging tax and other compliance costs.
He argues the UK's tax body HMRC "needs to create a level playing field between UK importers and Chinese exporters".
Sam Nunberg, who worked as an adviser to President Trump during his 2016 presidential election campaign, has told the BBC he believes tariffs are here to stay but will not consist of the "humongous" rates currently being imposed.
"I believe that the president has put out these humongous tariff rates as a starting negotiating point," he tells BBC Radio 4's Today programme.
"This is a starting point, this is not where this is going to end, but the president is not going to completely reverse course.
"There’s going to be a new tariff regime within the US and on the international trade market – the issue is what that looks like."
Nunberg adds that the policy will play out well among Trump’s core supporters, who feel that the American manufacturing heartland has been "hollowed out" by global trade but anticipates problems arising if and when reciprocal tariffs come in and there is a recession in the US.
Nick Edser
Business reporter
Banks and energy firms are among the shares doing well on the UK market this morning.
Oil giants BP, up 3%, and Shell, up 2%, are some of the biggest gainers in the FTSE 100, helped by a small rebound in the price of oil.
Among the major UK banks, Lloyds and Barclays are both up by about 2%.
The biggest riser in the FTSE 100 though is IAG Group – the airline group that includes British Airways and Iberia. Its shares are up 3.5%.
At the same point yesterday, every single company in the FTSE 100 index had fallen. So far on Tuesday, it's a much more balanced picture.
Health Secretary Wes Streeting has defended the government's response to President Trump's tariffs on UK goods.
Streeting tells the Today programme on BBC Radio 4 that measures announced yesterday, including on the relaxation of electric vehicle sales targets, have been brought forward by the government as a direct result of the tariffs.
He says the government has "made no bones about the fact we disagree with the decisions taken by the Trump administration" as they are "harmful to British interests".
"What the prime minister has been doing – contrary to those who preferred he would take to Twitter [now X] and pick up placards – is showing the cool, calm, level-headed leadership required both to get the best possible trading relationship with the US as well as with our other trading partners," he says.
As a reminder, goods going to the US from the UK now have a baseline 10% tax applied to them, with higher rates on cars, aluminium, and steel.
Nick Edser
Business reporter
Well the dust has settled after the first few minutes of trade and the major European markets are still trading higher.
The FTSE 100 is up 1.1%, Germany's Dax is 0.6% higher and the Cac 40 has risen 1.3%.
However, while analysts have welcomed the rises, they warn that sentiment remains fragile.
"This should hardly be seen as the end of the trouble, especially with President Trump showing no signs of easing his stance on perceived trade imbalances, having doubled down on China," says Matt Britzman, senior equity analyst at Hargreaves Lansdown.
However, signs of possible trade talks between the US and Japan offer "a glimmer of hope", he says.
"The sooner deals are reached; the quicker companies and investors can gain some clarity on the lay of the land."
Henry Wang, founder of the think tank Center for China and Globalization, has been speaking to the BBC’s Today programme on Radio 4 this morning.
He says the US should invite China to the negotiating table so it can explain why it has launched what he called an "unjustified" and "immoral" trade war.
"They should invite China, because they launched this trade war and they should give China an explanation for that," he says.
Wang says Trump's policy overlooks many of the US's strengths, including on service trade and harvesting global talents, before adding that the US is not in a position to complain about losing manufacturing jobs to other nations because it "abandoned" the industry.
Trading has just restarted in Europe and all the main stock markets are showing a slight rebound from the previous falls.
In the UK, the FTSE 100 has opened up 1%.
In France, the Cac 40 rose 1.8%.
Germany's Dax is up 1.3%.
Yesterday, Europe's biggest stock markets all opened – and closed – significantly down with some falling up to 10% on the day.
Ahead of the UK's stock market opening at 08:00 BST, here is a recap of what happened across Europe on Monday:
The FTSE 100 is the UK's biggest stock market index, and is made up of the largest firms listed in the UK. On Monday it opened at 2.4% down but then slumped to -4.4% at close.
Germany's Dax opened trading on the Frankfurt Stock Exchange with a stark drop of nearly 10%. However, the index managed to regain some ground, eventually closing at 4.1% down.
The French Cac40, a stock market index made up of the 40 most prominent listed companies in France,opened at around 7% down. It did manage to recover some of those losses, closing at 4.8% down.
The UK stock market will be opening in a few minutes, stay with us.
We've just been hearing from Republican House representative for Texas Pete Sessions, who tells BBC Radio 4's Today programme Trump's policy on tariffs has "ignited many capitalists" who are against it.
He says many ordinary Texans are also "concerned" but he believes it is a negotiating tactic from the Trump administration.
"All Texans believe that a tariff is a tax and it's not in America's best interest, nor people in the free world, to pay that extra money," he says.
"I think many people believe it is a negotiating tactic, certainly the administration has signalled he [Trump] is willing to negotiate with other countries and it is my hope that he continues to do that and we find an end to this that will be mutually good not just for Texas but for everyone."
He says Trump must look at the reaction in the markets and listen to the concerns being raised, saying he is hopeful this will play out within three to four weeks.
But he adds: "Once a play like this is made, getting the toothpaste back in the tube is hard."
Henry Zeffman
Chief political correspondent
As the trade war between China and the US intensifies, on the other side of the world the UK continues to pursue its own strategy of seeking a bilateral deal with President Trump.
For weeks in the run-up to the tariffs being imposed by the US, the UK sought to negotiate an economic agreement with Washington which would, among other things, mean the tariffs being reduced.
Yet in the days before Trump’s big announcement last week it became clear that the president was set on imposing blanket global tariffs.
The government still hopes that deal could be signed.
In fact, those close to the negotiation say it is essentially there, focusing on technology co-operation but covering various other parts of the economy too. What they admit remains something of a mystery is when, or whether, President Trump might actually sign it.
The longer he does not, the more questions you will hear here in the UK about the government’s approach. 
Anthony Zurcher
North America correspondent, Washington DC
A day before Donald Trump's "reciprocal" tariffs are scheduled to kick in, the US president appears locked in a high-stakes game of chicken, with the world's economy hanging in the balance.
So if this is about the start of broader systemic change – what is the desired end goal worth potentially tanking the global economy?
One theory is that Trump has a plan with several of his top advisers – the "Mar-a-Lago accord", it is called – with the ultimate goal of compelling America's trading partners to weaken the US dollar on the international currency exchange.
Such a move would make American exports more affordable to foreign markets and diminish the value of China's large reserves of US currency.
That's just one of the possible explanations for the current stock market mayhem that Trump has purposefully instigated – one that many other prominent economists warn is risky. It is far from the only one.
Is it all a negotiating tactic, or is he playing a longer game aimed at permanently restructuring the global economy and America's place in it?
On Monday, US President Donald Trump threatened additional tariffs on Chinese goods.
Writing on Truth Social, external, he said that unless China withdrew the 34% retaliatory tariff announced by Beijing last week, he would impose an additional 50% tariff on Wednesday.
Trump had already imposed a 20% tariff on China before announcing a further 34% rate last week. An additional 50% would take the total tariff rate on China to 104%.
He also opened the door for negotiations with other countries, which included meeting Israeli Prime Minister Benjamin Netanyahu in Washington yesterday, but said he was not considering pausing new tariffs.
Asked directly about a potential pause, he told reporters in the Oval Office: "We're not looking at that. We have many, many countries that are coming to negotiate deals with us, and there are going to be fair deals."
After a more positive performance from Asian markets, there are indications that European shares will also see a rebound when trading starts at 08:00 BST this morning.
Rachel Winter, a partner and investment manager at Killik & Co, tells the BBC's Today programme that "it’s looking to be very much a better day".
The futures market – which gives an indication of how markets will perform – suggests the UK's FTSE 100 share index will open about 2% higher.
However, the futures market can be volatile, so can change quite a bit before the market opens officially.
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