China on Friday announced a sharp increase in tariffs on American imports, marking a significant escalation in the ongoing trade dispute initiated by Donald Trump. The move triggered renewed fears of an impending global economic downturn.
China’s finance ministry declared that imports from the United States would incur an extra 34% tariff on top of existing duties, a development interpreted as a direct retaliation. Meanwhile, the commerce ministry indicated plans to widen curbs on the export of rare earth elements, crucial to high-tech industries including electric vehicle and battery production. In a further step, an additional 16 American firms and institutions were added to China’s export control register, limiting their engagement with Chinese enterprises.
Earlier, Beijing had vowed to take decisive action in response to Washington’s decision to impose a 10% blanket tariff on all inbound goods, with extra charges targeting specific countries, including China.
China’s tariff commission expressed the view that the reciprocal levies introduced by the US on April 2 represented a breach of global trade norms and posed a serious threat to China’s lawful trade interests. The commission criticised the US approach as an example of unilateral coercion.
Trump, writing on his platform Truth Social, insisted that China had mishandled the situation and accused it of acting out of fear, claiming that Beijing could ill afford such a response.
The fallout from the Trump administration’s latest tariff announcement earlier in the week reverberated across financial markets, heightening recessionary concerns. Analysts at JP Morgan revised their recession probability estimate to 60% by the year’s end, up from a previous forecast of 40%.
US equity futures tumbled sharply on Friday as trade tensions between the world’s two largest economies intensified. The newly announced tariffs were blamed for erasing $2.4 trillion in US market capitalisation.
London’s FTSE 100 index recorded a decline of over 300 points since opening, representing its sharpest daily fall since March 2023. Across Europe, the Stoxx 600 index registered a 4.4% drop.
Brent crude prices also took a hit, sliding 6.6% to $65.50 a barrel—its lowest level since August 2021.
A Chinese analyst commented that while China would not capitulate to pressure from Trump, it remained open to collaboration based on mutual benefit and respect. He characterised China’s response as measured and limited to trade-related actions.
Nevertheless, some commentators described Beijing’s reaction as assertive. An analyst suggested that China’s firm stance reflected its readiness to confront Trump’s economic measures head-on. He warned that markets were reacting to the prospect of a prolonged tit-for-tat confrontation.
There had been hopes among some observers that the two countries might strike an agreement before the April 9 implementation date for the new US tariffs. Trump had been rumoured to be weighing the use of tariff threats to force ByteDance to divest its TikTok operations to an American buyer.
Industry bodies in China have uniformly opposed the fresh round of US tariffs. The National Textile and Apparel Council voiced its backing for the government’s actions and accused Washington of disrupting the robustness of global supply chains in the textile sector.
