Trade war escalates as China hits US with huge tariff
China announced Wednesday massive retaliatory tariffs on US goods, sharply escalating a trade war started by President Donald Trump and fueling fresh panic in global markets.
Trump’s latest salvo of tariffs came into effect on dozens of trading partners earlier Wednesday, including punishing duties of 104 percent on imports of Chinese products, AFP reported.
Beijing originally planned to respond with a 34 percent tariff on imports of US products from 1601 GMT Wednesday, but the finance ministry said it would now raise the toll to 84 percent after Trump dramatically hiked his own duties on imports from China.
“The tariff escalation against China by the United States 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 United States to avoid tariffs.
Trump believes his policy will revive America’s lost manufacturing base by forcing companies to relocate to the United States.
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 on Tuesday, stock markets were in panic mode again, with Tokyo’s Nikkei index closing almost four percent lower on Wednesday.
Paris and Frankfurt sank four percent in afternoon trading while London was down 3.5 percent. 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 percent 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 $60 a barrel, their lowest level in four years.
Government bond yields – essentially the interest countries pay to borrow money – rose in the United States, Japan and Britain, among other countries.