Oil prices plunged nearly 8% on Friday to their lowest levels 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 prices fell for a second day, dragged down by a broader market selloff as major equity indexes plunged and recession fears mounted.

Beijing proposed additional levies of 34% on all U.S. goods, retaliating after Trump announced a minimum 10% tariff on most U.S. imports, with much 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 strategist at SEB. Schieldrop expects further retaliation from Trump, who said Friday that China is "playing the wrong way" and vowed not to change his policies.

The escalating tensions have fueled concerns that the tariffs could lead to a global trade war, weighing on economic growth and curbing demand for key commodities. The U.S. levies do not include energy, but China's retaliatory measures cover all U.S. goods, as well as export curbs on some rare earth metals.

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 were heavily sold off, with the Dow Jones poised for a correction while the Nasdaq was on track to enter a bear market.

Brent crude futures fell $4.53, or 6.46%, to settle at $65.63 a barrel by 2:41 p.m. ET (1841 GMT). U.S. West Texas Intermediate crude futures fell $4.93, or 7.36%, to settle at $62.02. The benchmarks settled at their lowest close since the middle of the COVID-19 pandemic in April 2021. (Newsmaker23)

Source: Reuters