A steep tariff of 84 percent on all United States goods entering China has taken effect, intensifying the trade conflict with Washington while urging for dialogue “on the basis of mutual respect and equality.”
The updated tariff rate – a 50 percent increase from Beijing’s previous 34 percent charge on US goods – was implemented at 12:01am Eastern Time [04:00 GMT] on Thursday, as reported by China’s State Administration Council. This applies to all US products entering the world’s second-largest economy, which, according to the US Trade Representative’s office, amounted to $143.5 billion last year.
This marks the second round of retaliatory tariff increases from China in response to US levies on Chinese imports, which now reach 125 percent. In addition to the new tariffs, Beijing has blacklisted 18 US companies, including aerospace manufacturer Sierra Nevada Corporation.
On the same day, China’s Ministry of Commerce stated that the country is open to discussions with the US, but such talks must be conducted on the principles of mutual respect and equality.
“Using pressure, threats, and blackmail is not the appropriate way to engage with China,” ministry spokesperson He Yongqian remarked at a press briefing when questioned about whether tariff negotiations have commenced between the two economies.
He further cautioned that China will “follow through to the end” if the US persists with its unilateral actions.
World Trade Organization (WTO) Director-General Ngozi Okonjo-Iweala warned that the intensifying trade conflict could potentially reduce US-China trade by as much as 80 percent, with serious repercussions for the global economy.
“The risk of fragmentation of global trade along geopolitical lines is particularly concerning,” she stated. “Dividing the global economy into two blocs could lead to a substantial long-term decline in global real GDP by nearly 7 percent.”
‘Nothing’s over yet’
The back-and-forth between the US and China occurs as US President Donald Trump retracts a wider set of global tariffs that had incited a significant stock market downturn and heightened fears of a recession.
On Wednesday, Trump announced a 90-day suspension of previously declared “reciprocal” tariffs affecting approximately 60 countries – with China being the noted exception – while maintaining a 10 percent baseline tariff.
Markets reacted positively: the US’s benchmark S&P 500 and Nasdaq stock indexes surged 9.5 percent and 12.16 percent, respectively, concluding a harsh weeklong decline.
Asian stocks also experienced a rally on Thursday, with notable gains in Hong Kong, Tokyo, Taipei, Australia, Indonesia, and Singapore.
The White House indicated that the tariff vacation was a reward for nations that did not retaliate against US trade actions. Trump, however, criticized China for demonstrating “a lack of respect” toward global markets and accused them of “ripping off” the US.
Nevertheless, by the end of the day, Trump adopted a more conciliatory stance, indicating a willingness to negotiate with China.
“Look, nothing’s over yet, but we have tremendous support from other countries, including China,” Trump stated outside the White House. He asserted that Beijing “wants to make a deal” but “is just uncertain about how to proceed.”
“It’s one of those things. They’re proud people,” Trump added.
‘China will continue to retaliate’
Nevertheless, analysts cautioned that Trump’s aggressive stance toward China could extend the stand-off.
“If the current trend continues, China is likely to keep retaliating until there is some progress,” observed Sophia Busch, assistant director at the Atlantic Council’s GeoEconomics Center. “Beijing appears quite comfortable and has ample experience with these types of coercive economic measures.”
“Trump’s focus on China is likely to solidify the belief in Beijing that there is a strategic intent to contain and suppress China,” noted Bill Bishop, an American journalist and China analyst.
Trump has defended his tariff strategy as essential for revitalizing US manufacturing by pressuring companies to return production to the US. He contends that China, in particular, undermines US industries by “dumping” inexpensive surplus goods onto global markets.
With tensions remaining high, China on Wednesday advised its citizens to “fully evaluate the risks” before traveling to the US.
