TLDR
- China announced 34% tariffs on all US goods, effective April 10, in retaliation to Trump’s tariffs
- China also imposed export controls on rare earths and added US firms to restricted lists
- Chinese customs suspended imports from several US agricultural companies
- Markets reacted negatively with significant drops worldwide
- Trump has suggested negotiations may follow despite the escalation
China announced on Friday it will place a 34% tariff on all US goods starting April 10. This action comes as a direct response to President Donald Trump’s recent imposition of a 34% tariff on Chinese goods. The escalating measures signal a deepening trade war between the world’s two largest economies.
The Chinese foreign ministry made the announcement as part of a broader package of countermeasures. These retaliatory actions come just days after Trump’s Wednesday announcement of new duties on Chinese imports, which brought total US levies on Chinese goods to 54%.
“This practice of the US is not in line with international trade rules, seriously undermines China’s legitimate rights and interests, and is a typical unilateral bullying practice,” China’s tariff commission stated.
The commission added that Trump’s actions “not only undermines the interests of the United States itself, but also endangers global economic development.”
Beyond Tariffs: Rare Earths and Entity Lists
China’s retaliation extends beyond simple tariffs. The country also announced export controls on medium and heavy rare earth elements including samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium. These restrictions take effect immediately.
Rare earth elements are crucial components in many high-tech products and defense applications. China’s commerce ministry stated the purpose of these export controls is “to better safeguard national security and interests, and to fulfill international obligations such as non-proliferation.”
In a further escalation, Beijing added 16 US entities to its export control list. This prohibits the export of dual-use items to these named firms. Another 11 US companies were placed on China’s “unreliable entities” list, allowing for punitive action.
The targeted companies include drone manufacturers Skydio Inc. and BRINC Drones. These firms were specifically targeted over arms sales to Taiwan, which China claims as its territory. Companies on these lists face prohibitions on new investments and import-export activities in China.
Agricultural and Medical Impacts
The agricultural sector took an immediate hit from the trade dispute. Chinese customs authorities suspended imports of sorghums from grain exporter C&D (USA) Inc. They also halted imports of poultry and bonemeal from three other US firms.
These agricultural suspensions represent another front in the growing trade war. The immediate implementation suggests China is targeting US farmers, who have been important supporters of Trump.
China also launched an anti-dumping probe into imports of certain medical CT tubes from the US and India. Additionally, the commerce ministry opened a wider industry investigation into the competitiveness of medical CT tube imports. These moves indicate China’s willingness to expand the trade conflict into the healthcare sector.
Market Reactions and Uncertainty
Global markets reacted negatively to the escalating trade tensions. Wall Street experienced its worst day since the COVID-19 pandemic began. Japan’s Nikkei dropped 2.8%, while European markets fell sharply with Germany’s DAX down 4.5% and the STOXX 600 Europe falling 4.6%.
US stock futures pointed to continued declines. Peter Andersen, founder of Andersen Capital Management, told Reuters: “The market, of course, is extremely surprised by China’s aggressive retaliatory actions. I don’t think many investors were anticipating such a sudden and large response.”
Despite market turmoil, Trump expressed optimism on Thursday evening, saying, “It’s going very well—the markets are going to boom, the stock is going to boom, the country is going to boom.”
This contrasts sharply with analysts’ warnings that the US could tip into stagflation if negotiations don’t occur within two months.
Some signs point to possible negotiations. Trump posted on Truth Social suggesting that “the rest of the world wants to see—is there any way they can make a deal.” Eric Trump, the president’s son, posted that “the first to negotiate will win—the last will absolutely lose.”
Canada’s Prime Minister Mark Carney has already announced plans to match the 25% levy on vehicle imports. Other world leaders are still considering whether to offer negotiations or pursue immediate retaliation.
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