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China is bringing the world closer to a full-scale trade war with announcing a 34% tariff on all US imports in retaliation for their duties announced by President Donald Trump this week.
Global stock markets extended their losses on Friday after the announcement, with Futures down the S&P 500 by 3.7% and tracking the STOXX 600 5.2% across Europe.
China’s Ministry of Commerce On Friday, he said tariffs, consistent with Trump’s latest increase in his duties in Beijing, will be imposed on all imports from the United States from April 10, the day after the US “mutual” taxation took effect.
Trump’s announcement of a 34% tariff on China’s imports into the US this week places Washington total collection on Chinese products on more than 60% he threatened during last year’s election campaign.
Previously, Beijing, which saw such a level of tariff as the worst-case scenario, denounced the new US obligation as “a typical, one-sided bullying move.”
This week’s US tariffs will “fail to comply with international trade rules and seriously undermine China’s legitimate rights and interests.”
Beijing’s latest measures could have the most impact on US agricultural exports, including soybeans, wheat and corn. China is also a key importer of medicines, crude oil, oil and liquefied natural gas from the United States.
The trade war comes at a sensitive moment for Chinese national president Xi Jinping. President Xi Jinping has relied on exports to guide the world’s second largest economy through sluggish and deflation in the real estate sector.
Trump’s move to impose sudden tariffs on US trading partners around the world has convulsed the market. On Thursday, around 2.5 tonnes of market value was erased from Wall Street stocks, wiping away all post-election profits in the dollar.
As the waterfall continues on Friday, the FTSE 100 fell to 4%, while the German DAX lost 5.6%.
Investors rushed into the US Treasury Department, pushing more than 0.2% points a day to less than 3.9%, bringing it to the lowest point since early October.
Beijing is one of the biggest targets of “mutual” tariffs announced by Trump, imposing a separate 20% obligation on Chinese products earlier this year.
Andrew Gilholm, head of China analysis at Consultancy Control Risks, said that given the surplus of US trade and the already existing tariffs and Chinese trade surplus, Beijing could suffer “major self-harm damage” in perfect alignment with US tariffs.
China announced an export ban on seven rare earth types on Friday, adding US tech companies, including drone makers Skydio and Brinc Drones, to the “untrusted entities” list, banning Chinese suppliers from selling components.
