China retaliated to new tariffs imposed by President Donald Trump by announcing it would raise duties on US goods, roiling markets and deepening a trade war between the world’s largest economies.
The Chinese government will impose an 84% tariff on all imports from the US starting April 10, the Finance Ministry said in a statement Wednesday. China’s move came hours after America’s steepest tariff hikes in a century went into force, taking Trump’s tariff hikes on Beijing this year to 104%.
China also said it would sue the US at the World Trade Organization, added six firms including Shield AI Inc. and Sierra Nevada Corp. to its unreliable entity list and slapped a dozen American companies including American Photonics and BRINC Drones with export controls.
President Xi Jinping’s latest hikes mirror the extra levies Trump put on Chinese goods as a punishment for Beijing’s last retaliation. With tariffs now soaring past the level economists say would decimate bilateral trade, any further duties would serve as a political statement rather than a way to apply economic pressure.
“China sent a clear signal today that the government will keep its stance on trade policies, despite the higher tariffs of the US,” said Zhang Zhiwei, president and chief economist for Pinpoint Asset Management Ltd. “I don’t expect a quick and easy way out from the current trade conflict. Meanwhile, the tariffs have become effective and the damage to the two economies will become visible soon.”
US equity futures fell more than 2% after China announced the new tariffs, a move that came after the Asian country vowed to “fight to the end.” Stocks in Europe slumped 4%.
See also: China restricts companies from investing in US as tensions rise
Beijing appears to have tweaked its tariff strategy, moving from answering immediately in the first two rounds to responding just as markets open in New York.
US Treasury Secretary Scott Bessent branded Beijing’s retaliation “unfortunate” in an interview with Fox Business, and urged China not to devalue the yuan, calling such a move a tax on the rest of the world. “The Chinese actually don’t want to come and negotiate, because they are the worst offenders in the international trading system,” he added.
Tensions have spiraled between Washington and Beijing since Trump returned to the White House in January. The US president has yet to speak with his Chinese counterpart more than two months after his inauguration, while Beijing has slammed Trump’s decision to escalate tariffs a “mistake on top of a mistake.”
See also: Xi woos global business leaders as Trump intensifies trade war
The two nations are also locked in a stalemate over China’s alleged role in the flow of fentanyl into America, which Trump cited as a reason for two previous rounds of tariffs.
Premier Li Qiang told a meeting of experts and entrepreneurs Wednesday that Beijing would work to expand domestic demand, adding that the government had fully anticipated the external pressures and was “well prepared” to handle them. In addition, he said that economy was resilient and maintained its upward momentum in the first quarter.
By not matching the full 104% imposed by Trump, Beijing has shown restraint, according to Josef Gregory Mahoney, a professor of international relations at Shanghai’s East China Normal University.
“China has reinforced its image of not being bullied while also showing to the world that it’s not going to sink the same level of absurdity, above all when it’s unnecessary and likely theater anyway,” he added.
