After equities crumpled and bond markets starting flashing red, Trump this week blinked first in his push to remodel the post-war system of global commerce and froze many tariffs for 90 days.

But he raised them for China to a staggering total of 145 percent, escalating a trade war between the world's two top economies and snuffing out a brief rally on financial markets.

As the dollar weakened as well, Trump acknowledged "a transition cost and transition problems," but dismissed global market turmoil. "In the end it's going to be a beautiful thing."

He described the European Union as "very smart" to refrain from retaliatory levies. But the bloc's chief warned that it still has "wide range of countermeasures" at the ready.

"(The EU) were ready to announce retaliation. And then they heard about what we did with respect to China'," Trump said.

French President Emmanuel Macron also urged the EU to keep preparing action to counter the tariffs, which are only paused but not scrapped.

"With the European Commission, we must show ourselves as strong: Europe must continue to work on all the necessary counter-measures," he said on X.

At talks with Spain's Prime Minister Pedro Sanchez on Friday, state media quoted Xi as saying that China and the EU should simply team up on the issue.

"China and Europe should fulfil their international responsibilities... and jointly resist unilateral bullying practices," Xi said.

This, he stressed, would not only "safeguard their own legitimate rights and interests, but also... safeguard international fairness and justice."

- 'No winners' -

After new falls on Wall Street, Asian markets were under pressure again on Friday.

Tokyo sank more than four percent -- a day after surging more than nine percent -- while Sydney, Seoul, Singapore and others also sagged.

Oil and the dollar slid on fears of a global slowdown while gold hit a new record above $3,200, as investors spooked by Trump's erratic policies dumped normally rock-solid US Treasuries.

"The sugar high from Trump's tariff pause is fading fast," said Stephen Innes at SPI Asset Management.

"Bottom line: the world's two largest economies are in a full-blown trade war -- and there are no winners."

- 'Golden Age' -

Trump says he wants to reorder the world economy by forcing manufacturers to base themselves in the United States and for countries to lower barriers to US goods.

Critics say Trump's policies are causing chaos for companies that rely on complex supply chains, alienating close allies and making goods more expensive for US consumers.

Howard Lutnick, his commerce secretary, posted on social media Thursday that "the Golden Age is coming. We are committed to protecting our interests, engaging in global negotiations and exploding our economy."

The EU welcomed the US president's partial row-back and proffered its own olive branch, suspending for 90 days tariffs teed up on 20 billion euros' ($22.4 billion) worth of US goods.

But the 27-nation bloc's chief Ursula von der Leyen told the Financial Times that it remained armed with a "wide range of countermeasures" if negotiations with Trump hit the skids.

"An example is you could put a levy on the advertising revenues of digital services" applying across the bloc, she said.

Trump likewise warned that the tariffs could come back after the 90 days.

"If we can't make the deal we want to make... then we'd go back to where we were," he said.

Canadian Prime Minister Mark Carney called Trump's reversal a "welcome reprieve" and said Ottawa would begin negotiations with Washington on a new economic deal after elections on April 28.

Vietnam said it had agreed with the United States to start trade talks, while Pakistan is sending a delegation to Washington.

As China battles to find allies against Trump's trade war, Xi will travel next week to Vietnam, Malaysia and Cambodia, where the tariff drama is expected to feature high on the agenda.

burs-stu/hmn