Trump’s latest salvo of tariffs came into effect on dozens of trading partners earlier today, including punishing duties of 104% on imports of Chinese products.
Beijing originally planned to respond with a 34% tariff on imports of US products from 4.01pm today, but the finance ministry said it would now raise the toll to 84% after Trump dramatically hiked his own duties on imports from China.
“The tariff escalation against China by the US simply piles mistakes on top of mistakes (and) severely infringes on China’s legitimate rights and interests,” the ministry said.
Washington’s moves “severely damage the multilateral rules-based trade system”, it added.
In a separate statement, Beijing’s commerce ministry said it would blacklist six American artificial intelligence firms, including Shield AI and Sierra Nevada Corp.
Trump did not immediately react to the Chinese counterattack but he called on companies to start relocating to the US to avoid tariffs.
“This is a GREAT time to move your COMPANY into the US, like Apple, and so many others, in record numbers, are doing,” the US president said on his Truth Social platform.
He urged: “DON’T WAIT, DO IT NOW!”
Trump believes his policy will revive America’s lost manufacturing base by forcing companies to relocate to the US.
However, many business experts and economists question how quickly – if ever – this can take place and warn it could reignite inflation.
Recession fears
The escalating trade war has wiped off trillions of dollars in market value since last week as investors fear that the trade war will spark a recession.
After some respite yesterday, stock markets were in panic mode again, with Tokyo’s Nikkei index closing almost 4% lower today.
Paris and Frankfurt sank 4% in afternoon trading while London was down 3.5%. US equities were expected to open with more losses.
The Bank of England warned of risks to “UK financial stability” from increased geopolitical tensions, including the fallout from the US tariffs.
Italy is preparing to cut its 2025 growth forecast in half, to 0.6% from 1.2%, a government source said, while Spain is also set to downgrade its outlook.
Central banks in India and New Zealand cut interest rates to boost their economies in the face of tariffs.
Oil prices fell below US$60 a barrel, their lowest level in four years.
Government bond yields – essentially the interest countries pay to borrow money – rose in the US, Japan and Britain, among other countries.
Drug makers next?
Trump has said his government was working on “tailored deals” with trading partners, with the White House saying it would prioritise allies such as Japan and South Korea, which were hit with tariffs of 24% and 25%, respectively.
His top trade official, Jamieson Greer, told the Senate that Argentina, Vietnam and Israel were among those who had offered to reduce their tariffs.
Vietnamese goods were hit with one of the highest tariffs, at 46%.
Trump told in a dinner with fellow Republicans yesterday night that countries were “dying” to make a deal.
“I’m telling you, these countries are calling us up kissing my a**,” he said.
The EU, whose goods were hit with a 20% tariff, is working on response that could be presented next week.
A Chinese government white paper released today emphasised that the Beijing and Washington could still resolve their differences “through equal-footed dialogue and mutually beneficial cooperation”.
Trump yesterday said the US was “taking in almost US$2 billion a day” from global tariffs.
He also said the US would announce a major tariff on pharmaceuticals “very shortly”, prompting a sell-off in shares of pharmaceutical companies.
Residents in Beijing expressed fears over the escalating trade war.
“I hope that everyone can sit down and reconcile and talk, and then put things out step by step, rather than irrationally escalate them,” Yu Yan, a lawyer, told AFP.
In the US, consumers also voiced worries over rising prices.
At a supermarket in New York, mother-of-two Anastasia Nevin told AFP she was “just trying to get by. It’s tough”, adding that she was in “survival mode”.