BEIJING: China and the European Union (EU) announced new trade barriers on U.S. goods on Wednesday in response to steep duties imposed by U.S. President Donald Trump, escalating a global trade war that has hammered markets and raised the likelihood of recession.
China announced a tariff hike on US imports to 84 per cent from 34pc, shortly after Trump’s punitive 104pc tariffs on Chinese imports kicked in today as a standoff between the world’s two largest economies showed no signs of resolution.
The EU said it would impose 25pc tariffs on a range of US imports in a first round of countermeasures. The 27-member bloc faces US tariffs of 20pc on most products and higher duties on autos and steel.
Countermeasures in Canada, a close US ally and major trading partner, also took effect on Wednesday.
Targeted US duties on dozens of other countries, from Japan to Madagascar, also took effect, the latest in a thicket of tariffs that are unwinding a global trading order that has been in place for decades. Tariffs in the world’s largest consumer market now average above 20pc, according to various estimates, up from 2.5pc before Trump took office.
Trump’s punishing tariffs — which he says aim to end US trade deficits with many countries — have upended a global trading order in place for decades, raising fears of recession and wiping trillions of dollars off the market value of major firms.
Global markets took a pummelling Wednesday as Trump’s eye-watering 104pc tariffs on China came into effect, and a savage selloff in US bonds sparked fears that foreign funds were fleeing US assets.
Beijing has consistently opposed tariff rises and said earlier today it would take “firm and forceful” steps to protect its interests.
Its finance ministry later said in a statement that “additional tariff rates” on imports originating in the US would “rise from 34pc to 84pc”, effective from 12:01pm on Thursday.
“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.
Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, said China “sent a clear signal today that the government will keep its stance on trade policies”.
“I don’t expect a quick and easy way out from the current trade conflict,” Zhang said, adding that “the damage to the two economies will become visible soon”.
“The outlook for international trade and global economic growth is highly uncertain.”
Beijing’s commerce ministry said in a separate statement that it would blacklist six US artificial intelligence firms, including Shield AI Inc. and Sierra Nevada Corp. The companies had either sold arms to Taiwan or collaborated on “military technology” with the island, the statement said.
Meanwhile, the EU will impose a 25pc duty on corn (maize) from April 15 in response to US steel and aluminium tariffs. US soybeans, which the EU imports in much bigger volumes than corn, will be subject to tariffs from December 1.
European countries mainly use corn to feed cattle, poultry and pigs. The retaliatory measures will price US corn out of European markets where buyers have scooped up abundant and cheap US supplies this season.
US Treasury Secretary Scott Bessent, in an interview with Fox Business Network, said China’s new tariffs were unfortunate.
“They have the most imbalanced economy in the history of the modern world, and I can tell you that this escalation is a loser for them,” he said.
This week has already brought crisis-era volatility to markets, wiping trillions of dollars off the value of stocks and hammering commodities and emerging markets.
Shares of big US banks fell pre-market, extending tariffs-induced losses after China announced its 84pc tariffs on US goods. Oil prices extended their four-year lows.
“The US and China are stuck in an unprecedented, and expensive, game of chicken, and it seems that both sides are unwilling to back down,” said Ting Lu, chief China economist at Nomura.
Trump had nearly doubled duties on Chinese imports, which had been set at 54pc last week, in response to previous counter-tariffs from Beijing.
The White House had no immediate comment on China’s latest retaliatory move.
Earlier today, China called its trade surplus with the US an inevitability and warned it had the “determination and means” to continue the fight if Trump kept hitting Chinese goods.
China’s currency has faced heavy downward pressure, with the offshore yuan at record lows due to the tariffs. But sources told Reuters that the central bank has asked major state-owned banks to reduce US dollar purchases and would not allow sharp yuan declines.
Meanwhile, China told the World Trade Organisation (WTO) that the US tariffs threatened to further destabilise global trade.
“The situation has dangerously escalated. … As one of the affected members, China expresses grave concern and firm opposition to this reckless move,” China said in a statement to the Geneva-based WTO today that was sent to Reuters by the Chinese mission to the WTO.
