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China has announced it will impose additional tariffs of 34 per cent on US imports in retaliation for duties unveiled by President Donald Trump this week, moving the world closer to a full-blown trade war.
The Ministry of Commerce said on Friday that the tariff, which matches Trump’s latest increase in duties on Beijing, would be imposed on all imported goods from the US from April 10, a day after the US’s “reciprocal” levies come into effect.
Global stock markets extended their losses on Friday after the announcement, with futures tracking the S&P 500 down 2 per cent and the Europe-wide Stoxx 600 4.4 per cent lower.
Total levies on Chinese exports to the US are set to rise to more than 60 per cent after Trump’s announcement of tariffs of 34 per cent that come on top of existing duties.
Beijing denounced the new US duties as “a typical unilateral bullying move” that “does not comply with the rules of international trade and seriously damages the legitimate rights and interest of China”.
The trade war comes at a sensitive moment for China’s leader, Xi Jinping, who has leaned on exports to steer the world’s second-largest economy through a property sector slump and deflation.
Beijing was among the biggest targets of the “reciprocal” tariffs Trump unveiled on Wednesday. The new duties came on top of a levy of 20 per cent previously imposed on the country by the US president.
The total US charges on China’s goods will now exceed the 60 per cent Trump threatened during the election campaign, which Beijing previously considered a worst-case scenario.
Trump’s move to impose steep tariffs on US trading partners around the world has convulsed markets. On Thursday, about $2.5tn in market value was erased from Wall Street stocks and all of the dollar’s post-election gains were wiped out.
As the falls continued on Friday, the FTSE 100 slumped 2.6 per cent and Germany’s Dax lost 4.8 per cent.
Investors swept into US Treasuries, pushing the yield down 0.15 percentage points on the day to just below 3.9 per cent, their lowest since early October.
Andrew Gilholm, head of China analysis at consultancy Control Risks, said that China cannot fully match the magnitude of US tariffs without “major self-inflicted damage”, given the trade imbalance between the two countries and the extent of tariffs already in place.
China on Friday also announced export bans on seven types of rare earths and added US tech companies, including drone makers Skydio and Brinc Drones, to its “unreliable entity” list, which bans Chinese suppliers from selling components to them.
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