China to impose 34% retaliatory tariff on all goods imported from the U.S.
China announced additional tariffs and restrictions on U.S. products starting April 10, in retaliation for tariffs imposed by U.S. President Donald Trump. The financial markets collapsed.
"All goods imported from the United States will be subject to an additional 34% tariff on top of the currently applicable tariff rate," the Ministry of Commerce of the People's Republic of China announced, one day after Washington imposed an additional 34% tariff on China. The measure will be implemented starting April 10, they said.
The People's Republic of China's Ministry of Commerce also announced it will restrict exports of a number of rare earth materials used in electronic components, the aerospace industry, and other sectors. Thus, controls will be imposed on the export of seven rare earth elements, including gadolinium, used for magnetic resonance imaging, and yttrium, used in electronic products. In addition, the People's Republic of China's Ministry of Commerce said it will take the case to the World Trade Organization (WTO).
Restrictions and sanctions on US companies
Similarly, the People's Republic of China's Ministry of Commerce announced it will add 16 U.S. companies to its export control list, explaining on its website that the measure aims to "protect national security and interests," affecting companies such as High Point Aerotechnologies, Sierra Nevada Corporation, and Universal Logistics Holdings.
In addition, the Commerce Department announced it will add 11 U.S. companies to its Untrustworthy Entities List for their "military cooperation with Taiwan" and for "seriously harming the national sovereignty, security, and development interests" of the Asian giant. These companies include Skydio, BRINC, and SYNEXXUS, which will be banned from making new investments in China or from importing or exporting to the country.
European stock markets and oil prices plummet
European stock markets, already battered, reacted immediately to this escalation of tensions between the world's two leading economic powers. At around 10:35 GMT, the London Stock Exchange fell 3.48%, the Frankfurt Stock Exchange fell 4.46%, the Paris Stock Exchange fell 3.83%, the Milan Stock Exchange fell 7.18%, and the Madrid Stock Exchange fell 5.66%.
The price of Brent crude oil, extracted mainly from the North Sea, for June delivery fell 4.99% to $66.64. The price of a barrel of West Texas Intermediate (WTI), the U.S. benchmark, for May delivery plummeted 5.23% to $63.45.
Wall Street, which had already plummeted the day before, opened the day in a nosedive. "To the many investors who will come to the United States and invest huge amounts of money, I will never change my policies," Trump responded on his social media platform, Truth. "This is a great time to get rich, richer than ever," he added.
The long-awaited trade war arrives
China's measures come a day after US President Donald Trump imposed a 34% tariff on Chinese goods, part of what Washington calls "reciprocal" levies on countries around the world. In Beijing's case, these tariffs are in addition to the 20% tariffs already in place. In total, Chinese imports will be subject to a tariff of at least 54%.
The People's Republic of China's Ministry of Commerce yesterday expressed its "firm opposition" to the tariffs and promised retaliation to "safeguard" the Asian country's rights and interests. In early March, China had already announced tariffs of 10% and 15% on agricultural products from the United States, in response to the 20% tariffs Trump had imposed on products from the Asian country.
During his first presidency (2017-2021), Trump already maintained a tense relationship with Beijing by imposing several rounds of tariffs worth around $370 billion annually, to which China responded with levies on US exports.
The US president also imposed steep tariffs the day before on countries where Chinese factories were relocated following the initial trade dispute, including Vietnam (46%), Cambodia (49%) and Laos (48%), blocking the export of Chinese products.