[BEIJING] China said on Friday (Apr 11) that it would raise tariffs on US goods to 125 per cent but would ignore further levies by US President Donald Trump because it no longer makes economic sense for importers to buy from America.
After a week of market mayhem as the world’s two largest economies took turns to put up trade barriers, Beijing dismissed Trump’s mounting brinkmanship as a “joke” and a “numbers game”.
Beijing accused Trump of unleashing turbulence in the market with the sweeping tariffs that have hit the world, and said the US “should bear full responsibility” for the chaos.
Trump has deployed sweeping tariffs, including painfully higher levies for dozens of major economies, as a stick to force manufacturers to base themselves in the US and for countries to lower barriers to US goods.
But following market turmoil this week, he blinked first in his push to remodel the post-war system of global commerce and froze many tariffs for 90 days, although he raised them for China to a staggering total of 145 per cent.
Beijing’s latest round of retaliation brings its levies to 125 per cent, effective on Saturday.
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But the Chinese finance ministry said that further action by the US will be ignored because “at the current tariff level, there is no possibility of market acceptance for US goods exported to China”.
Beijing’s commerce ministry said: “The United States’ imposition of round upon round of abnormally high tariffs on China has become a numbers game with no practical significance in economics.”
“If the US continues to play the tariff numbers game, China will ignore it,” a spokesperson said.
Beijing also said that it would file a lawsuit with the World Trade Organization over the latest round of levies.
Trump has acknowledged “a transition cost and transition problems” arising from his tariff strategy, but he has dismissed global market turmoil. “In the end it’s going to be a beautiful thing,” he commented.
He described the European Union as “very smart” to refrain from retaliatory levies. “(The EU) were ready to announce retaliation. And then they heard about what we did with respect to China,” Trump noted.
But the 27-nation bloc’s chief Ursula von der Leyen told the Financial Times that it remained armed with a “wide range of countermeasures” if negotiations with Trump hit the skids. “An example is you could put a levy on the advertising revenues of digital services (applying across the bloc)”, she said.
French President Emmanuel Macron also urged the EU to keep preparing action to counter the tariffs, which are only paused but not scrapped. “With the European Commission, we must show ourselves as strong: Europe must continue to work on all the necessary counter-measures,” he said in a post on X.
At talks with Spain’s Prime Minister Pedro Sanchez on Friday, state media quoted Chinese President Xi Jinping as saying that China and the EU should simply team up on the issue. “China and Europe should fulfil their international responsibilities… and jointly resist unilateral bullying practices,” Xi said. This, he stressed, would not only “safeguard their own legitimate rights and interests, but also safeguard international fairness and justice”.
After new falls on Wall Street, Asian markets were under pressure again on Friday. Tokyo sank more than 4 per cent – a day after surging more than 9 per cent – while Sydney, Seoul, Singapore and others also sagged.
European markets also retreated on China’s latest salvo.
Oil and the US dollar slid on fears of a global slowdown while gold hit a new record above US$3,200, as investors spooked by Trump’s erratic policies dumped normally rock-solid US Treasuries.
“The sugar high from Trump’s tariff pause is fading fast,” said Stephen Innes at SPI Asset Management. “Bottom line: the world’s two largest economies are in a full-blown trade war – and there are no winners.”
Critics of Trump’s policies say that they are causing chaos for companies that rely on complex supply chains, alienating close allies and making goods more expensive for US consumers.
But US commerce secretary Howard Lutnick posted on social media on Thursday that “the Golden Age” was coming. “We are committed to protecting our interests, engaging in global negotiations and exploding our economy,” he said.
Trump has, meanwhile, warned that the tariffs could come back after the 90 days. “If we can’t make the deal we want to make… then we would go back to where we were,” he maintained.
Canadian Prime Minister Mark Carney called Trump’s reversal a “welcome reprieve”, adding that Ottawa would begin negotiations with Washington on a new economic deal after elections on Apr 28.
Vietnam said that it had agreed with the US to start trade talks, while Pakistan is sending a delegation to Washington.
As China battles to find allies against Trump’s trade war, Xi will travel next week to Vietnam, Malaysia and Cambodia, where the tariff drama is expected to feature high on the agenda. AFP
