China retaliates with 84% tariffs on US goods as Trump tariffs kick in
EU to start retaliating against US tariffs next week
[BEIJING/BRUSSELS/WASHINGTON] China will impose 84 per cent tariffs on US goods from Thursday (Apr 10), up from the 34 per cent previously announced, its finance ministry said on Wednesday, firing the latest salvo in a global trade war sparked by US President Donald Trump.
Trump’s “reciprocal” tariffs on dozens of countries took effect earlier on Wednesday, including massive 104 per cent duties on Chinese goods. The European Union will impose retaliatory measures on April 15.
Trump’s punishing tariffs – which he says aim to end US trade deficits with many countries – have upended a global trading order in place for decades, raising fears of recession and wiping trillions of US dollars off the market value of major firms.
Global markets took a pummelling on Wednesday as Trump’s eye-watering 104 per cent tariffs on China came into effect, and a savage sell-off in US bonds sparked fears that foreign funds were fleeing US assets.
US Treasury Secretary Scott Bessent, in an interview with Fox Business Network, said China’s new tariffs were unfortunate.
“They have the most imbalanced economy in the history of the modern world, and I can tell you that this escalation is a loser for them,” he said.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
This week has already brought crisis-era volatility to markets, wiping trillions of US dollars off the value of stocks and hammering commodities and emerging markets.
Shares of big US banks fell pre-market, extending tariffs-induced losses after China announced its 84 per cent tariffs on US goods. Oil prices extended their four-year lows.
“The US and China are stuck in an unprecedented, and expensive, game of chicken, and it seems that both sides are unwilling to back down,” said Ting Lu, chief China economist at Nomura.
Trump had nearly doubled duties on Chinese imports, which had been set at 54 per cent last week, in response to previous counter-tariffs from Beijing.
The White House had no immediate comment on China’s latest retaliatory move.
Earlier on Wednesday, China called its trade surplus with the US an inevitability and warned it had the “determination and means” to continue the fight if Trump kept hitting Chinese goods.
China’s currency has faced heavy downward pressure, with the offshore yuan at record lows due to the tariffs. But sources told Reuters the central bank has asked major state-owned banks to reduce US dollar purchases and would not allow sharp yuan declines.
Meanwhile, China told the World Trade Organization that the US tariffs threatened to further destabilise global trade.
“The situation has dangerously escalated. ...As one of the affected members, China expresses grave concern and firm opposition to this reckless move,” China said in a statement to the Geneva-based WTO on Wednesday that was sent to Reuters by the Chinese mission to the WTO.
Market rout
Since Trump unveiled his tariffs on Apr 2, the S&P 500 has suffered its deepest loss since the benchmark’s creation in the 1950s. It is now nearing a bear market, defined as 20 per cent below its most recent high.
US Treasuries were also caught up in the market turmoil and extended heavy losses on Wednesday in a sign investors are dumping even their safest assets, and the US dollar, a traditional safe haven, was weaker against other major currencies.
European shares fell and US stock futures pointed to more pain ahead, following a grim session for most of Asia.
Trump has shrugged off the market rout and offered investors mixed signals about whether the tariffs will remain in the long term, describing them as “permanent” but also boasting that they are pressuring other leaders to ask for negotiations.
The European Union will launch its first countermeasures against Trump’s tariffs next week, the bloc’s members agreed on Wednesday.
The 27-nation bloc faces 25 per cent import tariffs on steel and aluminium and cars as well as the new broader tariffs of 20 per cent for almost all other goods under Trump’s policy to hit countries he says impose high barriers to US imports.
The European Union will put in place duties mostly of 25 per cent on a range of US imports from next Tuesday in response specifically to the US metals tariffs. The bloc is still assessing how to respond to the car and broader levies.
The US imports include maize, wheat, barley, rice, motorcycles, poultry, fruit, wood, clothing and dental floss, according to a document seen by Reuters. They totalled about US$23 billion last year, meaning the EU’s retaliation will be against goods worth less than the 26 billion euros of EU metals exports hit by US tariffs.
They are to enter into force in stages – on April 15, May 16 and a final stage on almonds and soy beans on December 1. REUTERS
Share with us your feedback on BT's products and services
