China on Friday, April 4, announced retaliatory tariffs on goods imported from the United States, after the US imposed further measures to tighten its trade policy.
The Asian country’s countermeasures, which became known on Friday, provide for levies of 34%. These tariffs apply to imports of all products from the United States. China’s countermeasures will take effect on April 10. It’s worth noting that in this case, Beijing has kept its promise to inflict an economic blow on Washington after the next phase of the escalation of the global trade war, which is gradually becoming an objective reality, consistently moving away from such a concept as a temporary situation, and no longer belongs to the category of theoretical probabilities, the materialization of which is not guaranteed in practice and is rather a hypothesis.
On Wednesday, April 2, the President of the United States Donald Trump announced reciprocal tariffs against virtually the entire world. The amount of levies varies depending on the country. Concerning China, the corresponding figure was 34%. This measure to tighten the trade policy of the United States concerns the import of all goods from an Asian country. It is worth noting separately that the tariffs announced on Wednesday were in addition to the 20% levies already in place at that time on shipments of products from China to the US. After the next phase of tightening the United States trade policy, the total amount of tariffs on goods imported from the Asian country increased to 54%. The levies announced on Wednesday will take effect on April 9, the day before Beijing’s countermeasures, which were probably imposed on the principle of reciprocity, begin to come into force in the practical plane.
The mutual tightening of trade policy measures between China and the United States will have sensitive consequences for the entire global economy. It is worth noting that the US is also unlikely to be able to avoid negative ramifications. In this case, the most noticeable consequence will be a rise in prices. China, despite its demonstrated resolute readiness for a trade war in the paradigm of tit-for-tat actions, will also become a party to the confrontation that has suffered losses. In this context, it is worth noting that, economically, the Asian country relies heavily on exports. For this reason, it is obvious that the narrowing of opportunities to earn on external shipments of products will be a significant blow to China’s economic system. According to the online data platform Statista, in 2024, the share of exports in the gross domestic product (GDP) of the Asian country was about 18.9%. The total value of Chinese merchandise exports for the mentioned period reached approximately 25.5 trillion yuan ($3.5 trillion). The deterioration of the external trade environment for Beijing is also a negative circumstance because the Asian country’s economy has recently been facing a weakening of growth momentum amid a protracted crisis in the real estate sector, sluggish domestic consumer activity, and falling investor confidence.
It is worth noting that the strengthening of China as a state in many aspects, including the economic one, has become a reality in recent years, largely due to globalization as the established world’s order of things. Protectionism means a significant deterioration in the prospects for the Asian country. Beijing is aware of this. In a relevant context, a representative example is that last month Chinese Premier Li Qiang at a gathering of global executives called on the meeting participants to resist protectionism and defend globalization. He also noted Beijing’s readiness for possible unexpected shocks, which on Wednesday probably became facts of objective reality. It is worth noting that from China’s point of view, the defense of globalization as a kind of semantic construct is not an abstract ideological narrative, but an objective need.
In an effort to adapt to the conditions and circumstances of the transforming configuration of the world’s reality, Beijing, in addition to being ready for countermeasures, also demonstrates a desire to develop relationships within Asia. In this case, it is worth mentioning that last week China, South Korea, and Japan held their first economic dialogue in the last five years. The countries stated their intention to facilitate regional trade. Seoul, Tokyo, and Beijing are aware of the need to diversify economic ties against the backdrop of Washington’s tightening tariff policy and the consequences of implementing appropriate measures.
As for the confrontation between China and the United States in the context of the so-called ripple effect of this process for the rest of the world, it is worth noting in an appropriate context that this is an opposition between two major economies and at the same time two major markets with which many countries seek to cooperate. According to Statista, as of 2024, the US GDP was $29.16 trillion. China’s GDP, according to estimates by the mentioned online data platform, reached $18.27 trillion last year.
Against the background of the escalating trade war, it is fair to assume that the world is gradually sinking into what, in a partially symbolic sense, can be described as a race for survival. This means increased economic confrontation, even to the point of fragmentation of the financial and production map of the Earth according to the block principle. In the relevant context, it implies a significant likelihood that countries will form alliances with certain allies to establish and subsequently implement economic ties in the broad and multidimensional sense of the relevant concept in parallel with the cessation or minimal interaction with states outside such international associations. Globalization, as a kind of form of the world’s reality, runs the risk of becoming the past that has nothing to do with the present.
China’s State Council Tariff Commission, as part of a statement on countermeasures against tariffs announced by Donald Trump on Wednesday, noted that the practices implemented by the United States do not comply with global trade rules and seriously undermine the legitimate rights and interests of the Asian country. It was also separately highlighted that Washington’s actions are a typical unilateral bullying practice.
It is worth mentioning that the White House, commenting on the initial two tranches of 10% additional duties on all imports of Chinese goods after the January inauguration of Donald Trump, said that these measures are necessary to stem the flow of illicit fentanyl from the Asian country.
It is worth noting that Beijing reacted through countermeasures to the previous phases of Washington’s tightening trade policy. At the same time, the tariffs announced by China on Friday have become much more extensive compared to the previous configuration of the relevant practice of the Asian country. Beijing reacted to Washington’s previous tariffs swiftly, but at the same time adhered to the principle of moderation. For example, China imposed levies on targeted US imports, including agricultural products and fuel. Beijing has also taken measures against certain companies from the United States and ramped up export controls.
Leah Fahy, a China economist at Capital Economics, described the countermeasures announced by the Asian country on Friday as a significant escalation in a research note. The expert also noted that the head of the People’s Republic of China, Xi Jinping, probably believes that the country’s economy is strong enough to withstand whatever Donald Trump throws at it next.
Tariffs from the United States against the Asian country turned out to be much higher than those indicators that economists described as the most realistic in the framework of preliminary forecasting. Most likely, levies will be a factor in fundamentally changing the interaction between the US and Chinese economic systems after decades of interdependence. The volume of trade between the United States and the Asian country is about half a trillion dollars.
It is worth noting that the retaliatory measures announced on Friday by China against the US include not only tariffs. As part of the relevant actions, Beijing has also added 11 companies from the United States to its unreliable entity list. Drone manufacturers were among the mentioned firms. The Asian country also put export controls on 16 US companies to prohibit external shipments of Chinese dual-use items.
It is worth noting that Beijing announced countermeasures against Washington on the day when millions of people in China celebrated a major public holiday called the Tomb Sweeping Festival. Whether this is some kind of accidental symbolism that characterizes the future results of what is happening, or whether it is just an ironic combination of circumstances in a certain sense and nothing more, it will become known from the time when the consequences of the current escalation of the trade war will be fully realized in the practical plane. It is worth noting that Beijing did not pre-select the date, acting within the framework of the goal of the fastest possible response.
The Chinese Commerce Ministry has announced an anti-dumping investigation into imported medical CT X-ray tubes originating from the United States and India.
Moreover, Beijing unveiled export controls on seven types of rare earth minerals to the US, including samarium, gadolinium, and terbium.
After China announced countermeasures on Friday, United States stocks showed a sharp drop. The Dow is down more than 1,000 points, or 2.7%. The broader S&P 500 showed a drop of more than 3%. The tech-heavy Nasdaq Composite fell 3.5%. European and United Kingdom stocks declined more than 3% on Friday. This is their worst performance in recent years.
It is worth noting that Friday’s downturn is a continuation of the process that was already observed on Thursday, April 3. On the mentioned day, the Dow declined by more than 1,600 points or almost 4%. The S&P 500 fell roughly 5%. The Nasdaq showed a decline of about 6%. According to media reports, each of the United States’ major indexes is on a downward trajectory, which is the most intense in the last five years, since the beginning of the coronavirus pandemic.
US Secretary of State Marco Rubio on Friday acknowledged that markets are crashing after the Donald Trump administration announced sweeping global tariffs. At the same time, he claimed that the markets will adjust. This statement was made during a conversation between Marco Rubio and reporters at a meeting of NATO foreign ministers in Brussels. According to him, businesses around the world, including in trade and global trade, just need to know what are the rules. He also noted that businesses will adjust to the mentioned rules, once they know what this is.
At the same time, investors are concerned that a sharp escalation of the trade war could trigger a recession scenario both in the United States economic system and globally.
Craig Singleton, a senior fellow at the US-based Foundation for Defense of Democracies, said that by matching Donald Trump’s tariffs, China is no longer nibbling at the edges — it’s mirroring United States actions head-on. It was also noted that this is not blind retaliation, but a clear recalibration. Moreover, Craig Singleton said that Beijing is hitting politically sensitive sectors, including agriculture, industrial goods, select rare earth restrictions, and new additions to the unreliable entity list.
At the same time, China is leaving its economic system open. To a certain extent, Beijing can use the current global situation to improve its position in the international arena. By keeping the economy accessible for full-fledged external interaction, China can begin to offer beneficial cooperation to other countries within the framework of a partnership concept based on the ideology of openness, and thereby strengthen its status as a kind of proponent of globalization. Against the background of the need for trade and industrial diversification related to the tariff war, many world capitals may show interest in such potential proposals from Beijing.
Levies have become a serious challenge for businesses which supply chains are rooted in China, as they are affected not only by Washington’s unexpectedly high duties towards Beijing but also by US trade policy tightening measures related to other Asian capitals. In this context, it is worth noting that on Wednesday, Donald Trump announced 46% tariffs on goods imported from Vietnam. Thailand, Japan, and South Korea faced 36%, 24%, and 25% levies, respectively.
China is currently stepping up its efforts to intensify domestic consumption, which is necessary to ensure an acceptable level of economic growth. It is possible that Beijing’s corresponding actions will become faster and more extensive against the background of US tariffs, which limit the opportunity to earn on exports.
Larry Hu, chief China economist at Macquarie Group, wrote in a Thursday research note that Donald Trump has effectively raised the average US tariff rate on Chinese products to 69%. It was noted that that’s because the average rate of goods from the Asian country was already at 15% when Mr. Trump took office in January. According to the expert’s estimates, the escalation of the trade confrontation between Beijing and Washington may cause China’s economic growth to decrease by 2.5 percentage points in 2025. It was also highlighted that the effects could manifest themselves through several channels, such as a drop in demand for goods from an Asian country in the United States, a potential global economic slowdown, and the hit on export re-routing.
Export re-routing refers to practices of exporting products that were previously imported into a country to another place without significant processing. Latin America and Southeast Asia were part of the implementation corresponding process during Donald Trump’s first term as president when China was trying to mitigate the effects of tariffs that were imposed at the mentioned time.
Beijing plans to achieve an economic growth target of about 5% this year. According to Larry Hu, to ensure an appropriate rate of GDP growth, China will have to take measures to stimulate domestic demand, which are necessary to offset the negative impact of tariffs from the United States.
It is worth noting that business diversification, which is necessary against the backdrop of the emerging global economic reality defined by the new levies, will not be an easy task in terms of implementation features. In recent years, many companies have taken certain measures to move production facilities outside of China, or at least thought about it as a possibility that they are likely to have to face in a literal practical sense. At the same time, the mentioned firms were interested in maintaining their presence in Asia, since this region is a huge market, although not with an even distribution of purchasing power, and in general a promising space for development.
Diversification outside of China has become relevant against the backdrop of deteriorating relationships between Beijing and Washington, which began even before Donald Trump’s victory in the United States presidential election last November. For example, the administration of former US President Joe Biden limited shipments of advanced chips and equipment for the production of cutting-edge microcircuits to China. Some of Washington’s allies have joined the relevant measures. Fearing sanctions from the United States and a narrowing of the space for business opportunities in China, companies began to consider the possibility of close cooperation with other Asian countries. The main alternatives in this case were India and China. For example, in February, the United States-based chip toolmaker company Lam Research announced its intention to invest more than $1 billion in India. Also in January, Microsoft announced that it would spend $3 billion to expand its Azure cloud and artificial intelligence capacity in the mentioned country. In September, Samsung Display Co. announced its intention to invest $1.8 billion in the implementation of a project to build a plant in the northern part of Vietnam. Foxconn, Apple’s supplier, in July, announced plans to make financial injections worth more than $500 million into the mentioned country as part of projects related to the manufacturing of smart entertainment products and the production of equipment for smart systems. However, the US tariffs announced on Wednesday significantly overshadowed bright hopes for alternative centers of activity in Asia relative to China. Levies on the import of Vietnamese goods have already been mentioned. India is facing 26% tariffs. Against this background, diversification within Asia is transformed from an alternative option for more profitable actions into a new complex task with uncertain prospects.
Cambodia, Laos, Myanmar, and Sri Lanka faced US levies of over 40%. This significantly limits the possibilities of business diversification within Asia. It is also worth noting that for the mentioned countries, the tightening of the tariff policy of the United States can have very painful consequences and become a kind of barrier to positive prospects. The economies of Cambodia, Laos, Myanmar, Sri Lanka, and many other Asian countries rely heavily on exports, which are facing an unfavorable environment in the context of the new trade reality.
Returning to the topic of the tariff confrontation between China and the United States, it is worth noting that in this case there is only one hope left, which can potentially guarantee a more optimistic future, but its implementation in terms of realism is not the maximum. In this context, it is understood that Washington and Beijing can reach a deal to resolve disputed issues and generate a more favorable space for economic cooperation. Some experts still believe that Donald Trump continues to perceive the tariff increase as a negotiating tool. At the same time, what is happening is increasingly less consistent with this point of view, which nevertheless should not be refuted or unequivocally denied as unviable. China is interested in the possibility of continuing trade with the United States. US companies will inevitably face financial losses due to the cessation of interaction with the Asian market. However, obvious pragmatism does not always subordinate all decisions and actions, including at the global level. It is still unknown whether the United States and China will be able to reach the deal. The corresponding probability seems less realistic against the background of harsh measures and countermeasures.
