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China has announced tariffs of 34 per cent on all US imports in retaliation for duties unveiled by President Donald Trump this week, moving the world closer to a full-blown trade war.
Global stock markets extended their losses on Friday after the announcement, with futures tracking the S&P 500 down 3.7 per cent and the Europe-wide Stoxx 600 5.2 per cent lower.
China’s Ministry of Commerce said on Friday that the tariff, which matches Trump’s latest increase in duties on Beijing, would be imposed on all imported goods from the US from April 10, a day after America’s “reciprocal” levies come into effect.
Trump’s announcement this week of the 34 per cent tariff on Chinese imports to the US will take Washington’s total levies on Chinese goods to more than the 60 per cent he threatened during last year’s election campaign.
Beijing, which had previously considered such a level of tariffs as a worst-case scenario, denounced the new US duties as “a typical unilateral bullying move”.
It added that this week’s round of US tariffs “does not comply with the rules of international trade and seriously damages the legitimate rights and interest of China”.
Beijing’s latest measures are likely to have the most impact on US agricultural exports, including soyabeans, wheat and corn. China is also a significant importer of pharmaceuticals, crude oil, petroleum gas and liquefied natural gas from the US.
The trade war comes at a sensitive moment for Chinese President Xi Jinping, who has leaned on exports to steer the world’s second-largest economy through a property sector slump and deflation.
Trump’s move to impose steep tariffs on US trading partners around the world has convulsed markets. On Thursday, about $2.5tn in market value was erased from Wall Street stocks and all of the dollar’s post-election gains were wiped out.
As the falls continued on Friday, the FTSE 100 slumped 4 per cent and Germany’s Dax lost 5.6 per cent.
Investors swept into US Treasuries, pushing the 10-year yield down more than 0.2 percentage points on the day to just below 3.9 per cent, their lowest since early October.
Beijing is among the biggest targets of the “reciprocal” tariffs unveiled by Trump, who had already imposed a separate duty of 20 per cent on Chinese goods earlier this year.
Andrew Gilholm, head of China analysis at consultancy Control Risks, said Beijing could suffer “major self-inflicted damage” from fully matching US tariffs, given China’s trade surplus with the US and the tariffs it already has in place.
China announced export bans on seven types of rare earths on Friday, while US tech companies, including drone makers Skydio and Brinc Drones, were added to its “unreliable entity” list, which bans Chinese suppliers from selling components to them.
