Key takeaways:
- China announced it will impose a 34% tariff on all US imports starting April 10th, matching the US “reciprocal” tariff announced earlier this week.
- The move escalates the trade war between the world’s two largest economies and fuels fears of a potential global recession.
- Major US stock indexes plunged, with the Dow falling over 1,600 points as markets reacted to the rising trade tensions.
- China also unveiled export controls on rare earth minerals used in high-tech products and initiated anti-dumping probes against some US imports.
Introduction
China fired a significant salvo in the escalating trade war with the United States, announcing on Friday that it will impose a 34% tariff on all imports from the US beginning April 10th. The retaliatory move comes just days after President Donald Trump unveiled a slate of double-digit “reciprocal” tariffs on imports from major US trading partners, including China. The tit-for-tat trade actions between the world’s two largest economies have fueled fears of a potential global recession and sparked a sharp selloff in global financial markets.
Detailed Analysis
China’s newly announced 34% tariff on US imports matches the rate imposed by the Trump administration earlier this week. In announcing the measures, Beijing minced no words in condemning the US actions, stating that Trump’s “reciprocal tariffs” seriously violate World Trade Organization rules and undermine the multilateral global trading system.
“This practice of the US is not in line with international trade rules, seriously undermines China’s legitimate rights and interests, and is a typical unilateral bullying practice,” China’s State Council Tariff Commission said in a statement.
Beyond the tariff hike on US goods, China unveiled a series of additional countermeasures. These include export controls on rare earth minerals used in high-tech manufacturing such as computer chips, batteries for electric vehicles, and aerospace applications. Beijing also added 27 US firms, including some defense technology companies, to trade sanction lists.
The announcement sent shockwaves through global markets, with US stock futures plunging as investors braced for the economic fallout. The Dow Jones Industrial Average fell more than 1,600 points on Thursday, its worst performance in about five years since the COVID-19 pandemic. European and Asian markets also saw steep declines.
Investment bank JP Morgan raised its forecast for a global recession by year-end to 60%, up from 40% previously. Stephane Ekolo, a market strategist at Tradition in London, summed up the investor sentiment:
“China comes out swinging with an aggressive response to Trump’s tariffs. This is significant and is unlikely to be over, hence the negative market reactions. Investors are afraid of a ‘tit for tat’ trade war situation.”
While the US has sought to portray the tariffs as a necessary response to unfair trade practices, Beijing has vociferously pushed back, accusing the Trump administration of unilateralism and threatening the stability of the global economic order. Calls are growing among US allies like the European Union for negotiations to resolve the dispute through the established frameworks of the World Trade Organization.
Larry Hu, an economist at Macquarie Group, warned that the latest escalation could shave up to 2.5 percentage points off China’s economic growth this year, which was already targeted at around 5%. Businesses with supply chains rooted in China now face unexpectedly high levies not just on Chinese goods, but imports from other Asian nations due to Trump’s broad-based tariffs.
Conclusion
The tit-for-tat escalation in tariffs between the US and China has significantly raised the stakes in the trade war between the world’s preeminent economic powers. With both sides digging in their heels, the risk of a protracted conflict has heightened, putting global growth prospects in jeopardy. As financial markets whipsawed in reaction to the dueling tariff announcements, calls are mounting for the two nations to return to the negotiating table and seek a resolution within the established rules-based framework before further damage is inflicted on the world economy.
References
1 Juliana Liu and Nectar Gan (April 4, 2025). “China imposes 34% reciprocal tariffs on imports of US goods in retaliation for Trump’s trade war”. CNN Business. Retrieved April 4, 2025.
2 Greg Norman (April 4, 2025). “China retaliates with 34% tariffs on US imports”. Fox Business. Retrieved April 4, 2025.
3 Trevor Hunnicutt, Mei Mei Chu and Susan Heavey (April 4, 2025). “China hits back hard in global trade war with tariffs on US goods”. Reuters. Retrieved April 4, 2025.
4 Amy Hawkins (April 4, 2025). “China retaliates to Trump’s ‘bullying practice’ with 34% tariffs on US imports”. The Guardian. Retrieved April 4, 2025.
5 Huizhong Wu and Elaine Kurtenbach (April 4, 2025). “China imposes a 34% tariff on imports of all U.S. products starting April 10”. The Associated Press. Retrieved April 4, 2025.
