On Friday, China imposed a 34% tariff on U.S. goods, marking the most significant escalation in the trade conflict with President Donald Trump. The move has fueled concerns about a potential recession and triggered a global downturn in stock markets.
Beijing also announced it was adding several U.S. entities to an export control list and classifying others as an “unreliable” entity.
Beijing’s Warning
On Thursday, China had called on the U.S. to cancel its latest tariffs immediately and promised to take countermeasures to protect its interests, following Trump’s announcement of broad levies on all U.S. trading partners.
The U.S. move disregards the balance of interests reached in multilateral trade negotiations over the years and the fact that it has long benefited greatly from international trade, the Chinese commerce ministry said in a statement.
“China firmly opposes this and will take countermeasures to safeguard its own rights and interests,” the ministry said, as the world’s largest economies look set to spiral deeper into a trade war that stands to upend global supply chains.
54% Tariff
Trump on Wednesday announced China would be hit with a 34% tariff, on top of the 20% he previously imposed earlier this year, bringing the total new levies to 54% and close to the 60% figure he had threatened while on the campaign trail.
Chinese exporters, as with those from every other economy, will face a 10% baseline tariff, as part of the new 34% levy, on almost all goods shipped to the world’s largest consumer economy from Saturday before the remaining, higher “reciprocal tariffs” take effect from April 9.
Trump also signed an executive order closing a trade loophole known as “de minimis” that has allowed low-value packages from China and Hong Kong to enter the U.S. duty free.
Recession
Nations from Canada to China have readied retaliation in an escalating trade war after Trump raised U.S. tariff barriers to their highest level in more than a century this week, leading to a plunge in world financial markets.
In Japan, one of United States’ top trading partners, Prime Minister Shigeru Ishiba said that the tariffs had created a “national crisis” as a plunge in banking shares on Friday set Tokyo’s stock market on course for its worst week in years.
Investment bank JP Morgan said it now sees a 60% chance of the global economy entering recession by year end, up from 40% previously.
(With inputs from Reuters)
