US-China trade war intensifies - Beijing tariffs take effect after Trump's measures are suspended
Donald Trump's trade war with China continues to escalate, as Beijing's 84% retaliatory tariffs came into effect hours after the US president announced a pause in reciprocal duties for dozens of countries, in addition to the Asian giant.
Markets recovered after Trump's announcement of the sudden pause, following the most volatile episode in financial markets since the pandemic.
However, tariffs against Chinese goods are now 125% and Beijing has vowed to "fight to the end".
The head of the World Trade Organization said an escalating US-China tariff war could cut trade in goods between the two countries by 80%. Given that the two economic giants account for 3% of world trade, the conflict could "seriously damage the global economic outlook".
Chinese companies selling products on Amazon were preparing to raise prices for the US or leave that market because of the "unprecedented blow" from tariffs, the head of China's largest e-commerce association said.
Trump's sudden change of stance, amid growing fears that the US is heading for a recession, sparked a dramatic rebound in stock markets across Asia. The president's 90-day pause kept the global tariff at 10% but stopped higher reciprocal duties.
"I thought people were getting a little out of control and getting ridiculous," Trump said when asked why he had announced the pause.
Meanwhile, Beijing announced it would impose 84% tariffs on US products and add 18 US companies to its trade restrictions list. This followed Trump's announcement of a global tariff regime on "Liberation Day," which added a 34% tariff to the 20% already imposed on China, prompting Beijing to announce reciprocal duties of 34%. Trump warned China to withdraw the measure or he would retaliate, but China refused and both sides launched a series of tariff hikes. Trump promised a 104% and then 125% tariff on Chinese imports and left them in place while announcing a suspension for other countries.
Asked by reporters, he claimed that China "wants to make a deal, they just don't know how to achieve that. They are proud people. So is President Xi Jinping. I know him very well. They don't know how to solve the situation, but they will find the answer," he said.
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