China retaliates with 84% tariffs on US goods, effective April 10

Bangkok: China has raised tariffs to 84 per cent on goods coming from the US in an additional countermeasure, with effect from April 10.

This came after President Donald Trump threatened additional tariffs on China, raising fresh concerns that his drive to rebalance the global economy could intensify a financially destructive trade war.

Last week, China said it would levy 34 per cent tariffs on all US goods.

On April 2, the president imposed a 10 per cent global tariff on hundreds of countries and promised far steeper “reciprocal” tariffs on April 9 for nations that he maintains have “ripped off” America.

Since February, the president has imposed successive rounds of tariffs on China. On Wednesday, the minimum tax on Chinese imports hit 104 per cent.

China hit back at the US with 34 per cent tariffs on American goods in tit-for-tat retaliation hours after Trump announced 34 per cent tariffs on China on April 4.

Angry over China’s retaliation, Trump further imposed 50 per cent tariffs, taking the levies on China since he took over the second term to 104 per cent.

The total US tariffs on China amounted to 115 per cent if the levies imposed in his previous term in office were included, according to the Hong Kong-based South China Morning Post report.

Trump’s tariffs target about USD 430 billion in Chinese exports. US exports to China totalled USD 143 billion last year.

The US trade deficit with China last year totalled USD 295.4 billion, according to official figures.

China is one of the few countries that retaliated against Trump’s global reciprocal tariffs. China’s tariffs targeted mainly about USD 30 billion in agricultural imports, which could hurt American farmers, who are Trump’s supporters.

Beijing also targeted export port control measures on certain rare earth metals aimed at hitting high-tech American defence, computers and smartphone industries.

The US is China’s third-largest export market.

Despite China putting up a brave front, there is considerable concern here about the impact of Trump’s tariffs on China’s economy, which is struggling with a slowdown due to falling exports, lack of domestic and the collapse of the housing market.

Larry Hu, chief China economist at investment bank Macquarie, estimated that Trump’s latest tariffs could reduce China’s exports by 15 percentage points and its gross domestic product (GDP) growth by 2-2.5 percentage points.

Bracing for Trump’s steep tariff, China’s central bank, the People’s Bank of China (PBOC), allowed the yuan to further weaken against the US dollar, setting its daily fixing rate – also known as the midpoint rate – at 7.2066 per USD to help better returns for its exports worldwide.

On Tuesday, Chinese Premier Li Qiang exuded confidence, saying that China has “enough policy tools” in reserve and is “fully capable of countering external shocks”, meaning Trump’s tariffs.

Li told European Commission President Ursula von der Leyen in phone talks that “the resolute measures taken by China are not only to safeguard its own sovereignty, security and development interests but also to defend international trade rules and international fairness and justice.”

China's macro policy this year has taken full account of various uncertainties and has sufficient reserves of policy tools to hedge against adverse external impacts, Li said, adding that China is fully confident in maintaining sustained and healthy economic development, state-run Xinhua reported.