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China has announced duties of 34 per cent on all US imports in retaliation for Donald Trump’s tariffs, moving the world closer to a full-blown trade war as the US president vowed he would never back down.
Global stock markets extended their losses on Friday after Beijing’s statement, with the S&P 500 down 4.8 per cent and the Europe-wide Stoxx 600 5.1 per cent lower, its biggest daily drop since 2020. Oil prices tumbled on fears of a global economic slowdown, with Brent crude down 6.9 per cent at $65.33 a barrel.
“CHINA PLAYED IT WRONG, THEY PANICKED — THE ONE THING THEY CANNOT AFFORD TO DO!” Trump posted on his Truth Social network just before Wall Street began trading for the day.
The new Chinese 34 per cent tariff matches the US president’s latest increase in duties on Beijing and comes on top of a previous tit-for-tat round this year.
China’s Ministry of Commerce said on Friday that it would be imposed on all US imported goods from April 10, a day after America’s “reciprocal” levies come into effect.
Beijing’s move was accompanied by a slew of other measures, including restrictions on rare earth exports and a probe of the China subsidiary of DuPont, the US chemicals giant.
Trump said he would persist with his policy, which will take Washington’s tariffs to their highest for more than a century, despite the falls on Wall Street and other stock exchanges around the world.
“TO THE MANY INVESTORS COMING INTO THE UNITED STATES AND INVESTING MASSIVE AMOUNTS OF MONEY, MY POLICIES WILL NEVER CHANGE,” he posted. “THIS IS A GREAT TIME TO GET RICH, RICHER THAN EVER BEFORE!”
His announcement this week will take average US tariffs on Chinese goods to 76 per cent, according to analysis by the Peterson Institute of International Economics.
That figure is well above the 60 per cent Trump threatened during last year’s election campaign.
Beijing, which had previously considered such a level of tariffs as a worst-case scenario, denounced the new US duties as “a typical unilateral bullying move”.
It added that this week’s round of US tariffs “does not comply with the rules of international trade and seriously damages the legitimate rights and interests of China”.
Leah Fahy, a China economist at Capital Economics, said in a research note that Beijing’s new retaliatory duty pushed the country’s average tariff on US imports up to about 50 per cent, marking a “significant escalation”.
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The latest measures are likely to have the most impact on US agricultural exports, including soyabeans, wheat and corn. China is also a significant importer of pharmaceuticals, crude oil, petroleum gas and liquefied natural gas from the US.
The trade war comes at a sensitive moment for China’s President Xi Jinping who has leaned on exports to steer the world’s second-largest economy through a slump in the property sector and deflation.
Alicia García-Herrero, chief economist for Asia-Pacific at Natixis, said Beijing’s latest round of tariffs suggested it was trying to position itself to be first in line for high-level negotiations with Washington.
Trump’s move to impose steep tariffs on US trading partners around the world has convulsed markets. On Thursday, all of the dollar’s post-election gains were wiped out.
As the falls continued on Friday, the FTSE 100 lost 5 per cent and Germany’s Dax closed 4.7 per cent lower.
“This is increasingly looking like a full-blown trade war,” said Guy Miller, chief market strategist at insurer Zurich, adding that the Trump administration’s “misguided economic policy” had not previously been priced in by markets.
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Investors swept into US Treasuries, pushing the 10-year yield down 0.13 percentage points on the day to 3.93 per cent.
Beijing is among the biggest targets of the “reciprocal” tariffs unveiled by Trump, who had already imposed a separate duty of 20 per cent on Chinese goods earlier this year.
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Andrew Gilholm, head of China analysis at consultancy Control Risks, said Beijing could suffer “major, self-inflicted damage” from fully matching US tariffs, given China’s trade surplus with the US and the tariffs it already has in place.
China announced export bans on seven types of rare earths on Friday, while US tech companies, including drone makers Skydio and Brinc Drones, were added to its “unreliable entity” list, which bans Chinese suppliers from selling components to them.
