China reacted by setting 34% tariffs on all American imports which began on April 10 following President Donald Trump’s escalation of the global trade war. On Wednesday Trump applied a 34% tariff to every Chinese product entering the United States which will continue to strain relations between the world’s two leading economies. The State Council Tariff Commission of China issued a statement which condemned the United States for violating trade regulations and infringing upon Chinese rights while performing unilateral bullying actions.
During his first year as president Trump increased Chinese import tariffs by 10% twice because of his concern about fentanyl distribution. Chinese products now face more than 54% of total U.S. tariffs because of prior duty implementations. The current Chinese retaliatory measures extend beyond previous measures since Beijing imposed targeted trade restrictions on U.S. agricultural products and energy supplies as well as commercial restrictions on American businesses. The Chinese government implemented two major retaliatory actions which included a 34% tariff system and a “unreliable entity list” that blacklisted 11 American drone manufacturers as well as blocked export permissions for 16 dual-purpose Chinese products. The Chinese government started anti-dumping investigations into U.S. and Indian medical X-ray tubes while implementing export controls on seven strategic rare-earth minerals including samarium.
Markets reeled. Market futures plummeted on Friday when Dow futures declined by 1,000 points (2.3%) and S&P 500 futures dropped 2.4% and Nasdaq futures lost 2.7% of their value. Stock prices throughout Europe and the United Kingdom experienced their worst decline in years amounting to more than 3%. The market suffered its worst downturn of the decade on Thursday as the Dow plummeted 1,600 points and the S&P 500 declined by 5% while the Nasdaq plummeted 6% during the day. Gold prices surged to an all-time high at $3,167 per ounce while investors sought safe havens.
U.S. Secretary of State Marco Rubio who was in Brussels for NATO conferences acknowledged the market downturn but dismissed its severity. According to his assessment businesses will learn the rules to implement necessary adjustments. The elevated tariffs will modify trade between the United States and China totaling half a trillion dollars. Chinese companies face a dual crisis because Trump extended his Asian trade tariffs which compound their existing difficulties. The escalating trade conflict makes it more challenging for China to recover its sluggish economy while it tries to stimulate domestic consumption.
