The News
China said Friday it will impose a 34% tariff on all US imports from April 10, in a tit-for-tat response to US President Donald Trump levying 34% duties on Chinese imports as part of his “Liberation Day” tariff blitz earlier this week.
Beijing called Trump’s move — which raises average US tariffs on China to at least 65% — a “typical act of unilateral bullying.”
Beijing also imposed export controls on several rare earth elements — crucial for advanced technologies and almost exclusively mined in China — and banned Chinese firms from selling components to an additional 11 American companies.
Chinese officials also said the country would halt chicken imports from some of the biggest US exporters of agricultural commodities.
SIGNALS
Beijing is not backing down
China’s swift response to Trump’s tariffs means “Beijing is going to play tough, instead of entering into negotiations with the US,” the South China Morning Post argued: Unlike Trump’s plan, Beijing did not exempt big export categories like pharmaceuticals or semiconductors. But an economist told the Financial Times that the aggressive measures suggest China is “trying to position itself to be first in line for high-level negotiations with Washington.” Even if China shows it has “no intention of backing down,” an economist noted that it “doesn’t invalidate the idea that they make a deal at some point.” Still, Beijing could suffer “major self-inflicted damage” with its tit-for-tat moves, given its huge trade surplus with the US, another analyst predicted.
China’s retaliatory measures boost fears of US, global recession
“Beijing’s retaliation brings the world to the brink of a fully-fledged trade war,” Politico wrote. After Thursday’s market meltdown, Wall Street tumbled Friday following China’s announcement, with US tech and oil majors dropping sharply. “The market is doing one thing: pricing in a global recession,” a Deutsche Bank analyst said. JP Morgan raised the probability of a US and global recession by year end to 60% Friday, forecasting that the effects of Trump’s levies are “likely to be magnified through retaliation, a slide in US business sentiment and supply chain disruptions.”