An 84% rugged tariff on all US goods that entered China began, ratcheting the trade war with Washington, seeking dialogue “on the basis of mutual respect and equality.”
The new rate – a 50% increase in previous 34% collection on US goods in Beijing – came into effect at 12:01 am Eastern Time [04:00 GMT] Thursday, according to China’s state council of power. This applies to all US products entering the world’s second-largest economy, which totaled $143.5 billion last year, according to the US Trade Representative.
This marks China’s second retaliatory tariff hike in response to US obligations on China’s imports, now at 125%. In addition to the new tariffs, Beijing has blacklisted 18 companies, including aerospace manufacturer Sierra Nevada Corporation.
Also on Thursday, China’s Commerce Department said China is open to dialogue with the US, but this must be based on mutual respect and equality.
Pressure, threats and threats are not the right way to deal with China, his Yong Kian province spokesman told a reporting briefing when asked whether the two biggest economies in the world have launched tariff negotiations.
If the US claims in its own way, China “continues to the end,” he added.
World Trade Organization (WTO) Director Ngozi Okonjo-Iweala warned that the escalating trade feud would have a significant impact on the global economy and could cut US-China trade by up to 80%.
“One of particular concern is the potential fragmentation of global trade along geopolitical lines,” she said. “Dividing the global economy into two blocs could potentially reduce long-term reductions in real world GDP by nearly 7%.”
“Nothing is finished yet.”
When US President Donald Trump backs back the wider global tariff set that has caused sharp stock market sales and fear of the recession, TAT’s US-China TIT comes.
On Wednesday, Trump announced a 90-day suspension with previously announced “mutual” tariffs targeting around 60 countries except China, while introducing a 10% baseline tariff.
The market responded with peace of mind. The US benchmark S&P 500 and NASDAQ stock indexes surged 9.5% and 12.16% respectively, snapping the brutal weekly decline.
Stocks across Asia also gathered on Thursday, earning profits in Hong Kong, Tokyo, Taipei, Australia, Indonesia and Singapore.
The White House said the suspension of tariffs is a reward for countries refraining from retaliation for US trade moves. Meanwhile, Trump has shown a “lack of respect” for the global market and denounced China for “taking” the United States.
However, later that day, Trump took a more reconciliatory tone, leaving the door open for a deal with China.
“Look, there’s nothing yet, but there’s an incredible spirit from other countries, including China,” Trump said outside the White House. He insisted that Beijing “want to do a deal” but “I don’t know at all how to go about it.”
“It’s one of those things. They’re people who are proud of,” Trump said.
“China continues to retaliate.”
Still, analysts warned that Trump’s hard-pressed approach to China could potentially extend the standoff.
Sophia Bush, assistant director of the Atlantic Council’s Geographical Economics Centre, said: “We found that Beijing is very comfortable and we have a lot of practice with these kinds of forced economic tools.”
“Trump’s singles from China will reinforce Beijing’s view that there is a consistent strategic plan to contain and suppress China,” said Bill Bishop, a US journalist and Chinese analyst.
Trump defends his tariff policy as a way to revive American manufacturing by putting pressure on businesses to bring production back to the country. He in particular argues that China is weakening the US industry by “dumping” cheap and excess goods into the global market.
With tensions still high, China warned its citizens on Wednesday to “completely assess the risks” before travelling to the US.
