In a bold move, China has declared a 34% tariff on all imports from the United States starting April 10, as a counteraction to President Donald Trump's previous tariff hikes on Chinese products. The State Council Tariff Commission of China released an official statement criticizing the United States for practices that allegedly defy international trade rules and severely infringe on China's legitimate rights and interests.
President Trump fired back with a blunt message on social media: "China made a mistake, they're in panic mode: they can't afford to do this!" He justified his tariff strategy as a necessary step to curb the influx of illegal substances like fentanyl, which, according to the White House, are sourced from China.
Consequently, Chinese imports have been subjected to an additional 10% duty, increasing the costs of these goods for American consumers. In retaliation, China not only raised tariffs but also took further action by placing 11 US companies on its "unreliable entities list." Additionally, export controls were imposed on 16 more businesses, tightening the trade restrictions between the two nations.
The heightened trade tensions have immediately impacted global financial markets, with US stock futures plunging significantly following China's announcement. This reflects the uncertainty looming over global trade.
The timing of China's response coincides with a sensitive period for its economy, which is grappling with slowing growth and internal pressures to boost consumer spending.
Trump, meanwhile, has made it clear that his administration will not solely focus on Beijing. In his latest remarks, he announced a blanket 10% tariff on all imports from countries he accuses of "taking advantage of the United States." This includes the European Union, which will face a 20% tariff.
The President declared April 2 as "Economic Independence Day" in the United States, signing an executive order intended to "build a wall against imports." This initiative, he stated, is part of an effort to lessen reliance on foreign imports and stimulate domestic manufacturing.
Key Questions on the US-China Trade Dispute
What prompted China's imposition of tariffs on US goods?
China's tariffs are a response to President Trump's previous tariff increases on Chinese imports, which China views as a violation of international trade norms.
How have the new Chinese tariffs affected financial markets?
The announcement of China's retaliatory tariffs led to a sharp decline in US stock futures, highlighting the uncertainty and potential impact on global trade.