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By Anna Hirtenstein and Karl Plume
LONDON/CHICAGO (Reuters) -Oil prices plunged nearly 8% on Friday to the lowest level since 2021, while copper, soybeans and other commodities also fell as China retaliated against U.S. President Donald Trump's aggressive tariffs.
Safe-haven gold was down for a second day, swept up in a broader market selloff as major equities indexes plunged and recession fears swelled.
Beijing put forward a 34% additional levy on all U.S. goods, hitting back after Trump announced a 10% minimum tariff on most U.S. imports, with significantly higher duties for dozens of countries including China.
"This is the first very explicit escalation from China, they are not backing down, they are upping the game," said Bjarne Schieldrop, chief commodities analyst at SEB. Schieldrop expected further retaliation from Trump, who said on Friday that China "played it wrong" and vowed not to change his policies.
The accelerating tensions further drove fears that the tariffs could lead to a global trade war, weighing on economic growth and curbing demand for key commodities. The levies by the U.S. excluded energy, but the retaliatory move by China encompasses all U.S. goods, as well as export curbs on some rare earths.
The U.S. is a major energy exporter and sells oil and LNG to China, according to data from analytics firm Kpler and the U.S. Energy Information Administration.
Wall Street benchmarks sold off heavily, with the Dow Jones set to reach a correction while the Nasdaq was on track to enter a bear market.
Brent futures dived $4.53, or 6.46%, to $65.63 a barrel by 2:41 p.m. ET (1841 GMT). U.S. West Texas Intermediate crude futures were down $4.93, or 7.36%, to $62.02. The oil benchmarks were set for the lowest close since the middle of the COVID-19 pandemic in April 2021.
SOYBEANS, GRAINS
Soybean futures on the Chicago Board of Trade fell more than 3% on Friday as China's tariffs on U.S. goods were expected to bring trade in the oilseed between the countries to a halt. China, the largest soybean buyer, was seen accelerating purchases from rival supplier Brazil. [GRA/] CBOT soybeans ended down 3.4% at $9.77 a bushel, the lowest since late December.
CBOT wheat fell 1.3% to $5.29 a bushel while corn bucked the broader weakness to close up 0.6% at $4.60-1/4 a bushel as top importer Mexico was excluded from Trump's sweeping tariffs this week.
Demand for U.S. agricultural products already came under pressure from a trade war during Trump's first term in 2018. Beijing raised duties last month on $21 billion worth of U.S. products in response to Washington's earlier round of tariffs on Chinese goods.
Base metals sold off, with London Metal Exchange three-month copper down 3%, its biggest daily slide since the early days of the pandemic in 2020. Aluminum , already subject to a 25% U.S. import tariff, was down 3% at its lowest since September. [MET/L]
Spot gold was down 3% as traders liquidated their bullion positions following wider market selloffs. [GOL/]
(Reporting by Anna Hirtenstein in London and Karl Plume in Chicago, additional reporting by Nigel Hunt and Marwa Rashad in London and Nora Buli in Oslo; editing by David Evans and Nia Williams)
