China has announced an additional retaliatory tariff of 50 per cent on US imports, escalating the trade war between the world’s two biggest economies.
Beijing’s finance ministry said on Wednesday that its new levies would apply on top of its previously announced 34 per cent tariffs on US imports. It added that the latest tariff would take effect on Thursday.
The measure would take total duties on US imports introduced during the current Trump administration to 104 per cent.
The Trump administration had earlier imposed a “reciprocal” duty of 34 per cent on China, and then raised this by 50 per cent.
The latest salvo comes as market turmoil intensified on Wednesday after Donald Trump’s sweeping tariffs took effect, with government bonds and stocks selling off.
US Treasuries were hit hard, with the 10-year yield, a global benchmark for borrowing costs, jumping to 4.51 per cent before easing to 4.4 per cent, up 0.14 percentage points on the day and rising from less than 3.9 per cent on Monday.
The 10-year Japanese government bond yield spiked as high as 1.37 per cent before retreating to 1.27 per cent, little changed on the day. Bond yields move inversely to prices.
Stock markets came under renewed pressure. The Stoxx Europe 600 fell 3.6 per cent before paring losses to 3.2 per cent. The FTSE 100 and Germany’s Dax were both down 2.9 per cent, also paring earlier losses.
Contracts tracking the S&P 500 and the Nasdaq 100 each fell almost 3 per cent earlier in the day before recovering to trade roughly flat.
Investors and economists have warned that Trump’s tariffs have increased the risk of a recession in the US, the world’s biggest economy, as well as a new bout of inflation.
Ed Yardeni of Yardeni Associates said the sell-off in Treasuries, typically a haven for investors during periods of market stress, was signalling that the “Trump administration may be playing with liquid nitro”.
