China’s countermeasures against the US have come into effect, raising tariffs on all US imports to 84% in retaliation against Donald Trump’s tariff increase on Chinese imports to 125%.
The escalating trade war between the world’s two largest economies has reached extraordinary levels of cumulative tariffs and counter-tariffs, with neither side suggesting they will back down.
Beijing has vowed to “fight to the end”, refusing to back down in the face of Trump’s efforts to bring the world’s governments to the negotiating table.
China announced reciprocal tariffs of 34% in retaliation to Trump’s first round, on what he termed “liberation day”. Trump warned China to withdraw it or he would raise theirs again. China refused, and the two sides embarked on a series of tit-for-tat raises. With Trump pledging 125% against Chinese imports, Beijing said it would impose 84% on US products, now in effect. It has also put 18 US companies on trade restriction lists, among other countermeasures.
China now appears to be approaching other nations in an apparent attempt to shore up trading agreements away from the US and its punitive tariffs. Markets responded positively to Trump’s pause, including in China. Major Chinese trading markets had mostly weathered the carnage seen across the world earlier this week, apparently because of government interventions.
After days of seemingly doubling down on his position, Trump announced a 90-day pause on the proposed reciprocal tariffs for most countries, except China. Asked about his stunning U-turn, Trump said: “Well, I thought that people were jumping a little bit out of line. They were getting yippy. They were getting a little bit afraid.”
Asian markets, from Tokyo to Hong Kong and Shanghai, responded positively to Trump’s tariff reprieve, with stocks rising across the board. The Hang Seng Index has climbed more than 3%, or 632 points, to 20,896.95, while the Shanghai Composite Index jumped 1.29%, or 41.03 points, to 3,227.84.
Global markets also soared after Trump announced his 90-day tariff pause. The S&P 500 soared 9.5%, while the Nasdaq jumped 12%.
European stock markets are expected to soar when trading begins.
The futures market shows that London’s FTSE 100 is expected to jump by almost 400 points, or more than 5%.
Germany’s Dax index is set for a 7% leap.
Despite the market rebound, the head of the World Trade Organization said the US-China tariff war could cut trade in goods between the two countries by 80%. Given the two economic giants account for 3% of world trade, the conflict could “severely damage the global economic outlook”, Ngozi Okonjo-Iweala said.
Consumer prices in China fell in March for the second straight month, Reuters reports, citing official data, as the world’s second-largest economy struggles to boost spending and a trade war with the US deepens.
While deflation suggests the cost of goods is falling, it poses a threat to the broader economy as consumers tend to postpone purchases under such conditions, hoping for further reductions in prices. A lack of demand can then force companies to cut production, lay off workers and potentially discount existing stocks.
The consumer price index – a key measure of inflation – was down 0.1% year on year in March, according to data released by the National Bureau of Statistics. The figure came in slightly lower than expected by analysts surveyed by Bloomberg, who predicted the index would remain unchanged. But the index’s decline narrowed from the 0.7 percent drop year on year in February. The prices of food, tobacco and alcohol fell by 0.6%.
The drop comes as Beijing seeks to boost domestic consumption, which has yet to recover to pre-pandemic levels and is further threatened by a trade war with the US.
The agenda
• 1.30pm BST: US inflation; US weekly initial jobs claims
• 2pm BST: Bank of England policymaker Sarah Breeden speaking about the UK's economic and financial stability prospects
We'll be tracking all the main events throughout the day … |
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