China Hits Back with 34% Tariffs on All US Imports as Trade War with Trump Escalates
In a dramatic escalation of global trade tensions, China has announced it will impose a sweeping 34% tariff on all imports from the United States starting April 10, in direct retaliation for the United States’ decision to raise tariffs on Chinese goods. This move marks a significant intensification in the ongoing trade war between the world’s two largest economies, with both sides now locked in a tit-for-tat tariff battle that could have far-reaching implications for global trade, investment, and economic growth.
Just days earlier, former U.S. President Donald Trump, who returned to power in January, unveiled a 34% tariff on all Chinese goods entering the U.S., in addition to two earlier rounds of 10% tariffs. These measures, according to the White House, were introduced to combat the flow of illicit fentanyl from China into the U.S. However, the cumulative impact means Chinese imports into the U.S. are now subject to effective tariff rates exceeding 54%, and as Macquarie Group’s chief China economist Larry Hu noted, average U.S. tariffs on Chinese goods have skyrocketed to 69%—a significant leap from the 15% rate before Trump’s return.
China’s Ministry of Commerce strongly condemned the U.S. action, calling it a “typical unilateral bullying practice” that violates international trade norms and undermines China’s legitimate economic interests. In response, China’s State Council Tariff Commission confirmed the imposition of matching 34% tariffs on all U.S. imports, a retaliatory move that is broader and more impactful than Beijing’s earlier responses. This strategic countermeasure was announced as the country observed the traditional Tomb Sweeping Festival, highlighting the gravity and symbolism of Beijing’s stance.
In addition to tariffs, China has stepped up its response by adding 11 U.S. firms, including drone manufacturers, to its “unreliable entity list”—a designation that severely restricts business operations with China. Furthermore, it implemented export controls on 16 American companies, halting the supply of Chinese-made dual-use items. The Chinese government also launched anti-dumping investigations into imported medical CT X-ray tubes from the U.S. and India, intensifying regulatory scrutiny and trade barriers.
A particularly strategic element of China’s retaliation involves its decision to place export controls on seven rare earth elements vital to various high-tech and defense industries, including samarium, gadolinium, and terbium. These rare earths are crucial for manufacturing electronics, military equipment, and clean energy technologies, making their restriction a powerful economic lever.
The repercussions of this escalating trade conflict have sent shockwaves through global financial markets. On Friday, U.S. stocks nosedived following China’s tariff announcement, with the Dow Jones Industrial Average plunging over 1,000 points, or 2.7%. The S&P 500 and Nasdaq Composite fared even worse, falling 3% and 3.5% respectively. European and UK markets mirrored the decline, with many indices on track for their worst single-day performance in years. A day earlier, markets had already shown signs of stress, with the Dow dropping nearly 4%, the S&P 500 falling 5%, and the Nasdaq tumbling almost 6%—recording their steepest losses since the COVID-19 pandemic began.
U.S. Secretary of State Marco Rubio acknowledged the market turmoil but expressed confidence that “the markets will adjust” once businesses understand the new trade rules. However, investors and analysts are growing increasingly concerned that the trade war’s rapid escalation could trigger a global recession, especially if the tariff tit-for-tat continues unchecked.
Craig Singleton, a senior fellow at the U.S.-based Foundation for Defense of Democracies, pointed out that China’s retaliation is not just symbolic but a direct recalibration aimed at mirroring Trump’s aggressive tactics. China is targeting politically sensitive U.S. sectors such as agriculture, industrial goods, and high-tech exports while still attempting to keep its broader economy open and functional.
Yet, the consequences are far-reaching for businesses, especially those reliant on China-centered supply chains. The sudden imposition of steep tariffs and increased compliance scrutiny has left many companies scrambling to adapt. Compounding the issue is the broader reach of Trump’s global tariffs, which now also affect other Asian nations, adding further uncertainty for international trade.
This new round of tariffs could not come at a worse time for China, which is already grappling with a slowing economy and trying to revive domestic consumption. Beijing has set a 5% economic growth target for 2025—a goal now threatened by the potential trade-driven drag on exports. According to Larry Hu, the current tariff escalation could shave off up to 2.5 percentage points from China’s GDP growth this year, with impacts expected to ripple across various economic channels, from shrinking U.S. demand to a global slowdown and disrupted export logistics.
To counteract these economic pressures, Chinese firms may once again resort to export re-routing—a strategy used during Trump’s first term where Chinese goods were diverted to other countries like those in Southeast Asia and Latin America before being sent to their final destinations. This tactic helped soften the blow of earlier tariffs, but its effectiveness remains uncertain under the present, more aggressive climate.
The escalating trade war between China and the U.S. represents a pivotal moment for international economics and geopolitics. With both sides hardening their positions and implementing sweeping measures, the chances of a swift resolution appear slim. The world now watches closely as this high-stakes confrontation unfolds, knowing that its outcome will significantly shape the future of global trade dynamics.
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