China promises to go to end in tariff war with Trump
Photo: Xi Jinping and Donald Trump (Getty Images)
China has vowed to "fight to the end" if US President Donald Trump follows through on his threat to raise tariffs by 50%. At this point, the size of the tariffs no longer matters, Reuters reports.
If neither side backs down, the total amount of new US tariffs on Chinese goods this year could rise to 104%.
"The US side's threat to escalate tariffs against China is a mistake on top of a mistake, once again exposing the American side's blackmailing nature. If the United States insists on having its way, China will fight to the end," the Chinese commerce ministry said in a statement.
Trump stated that on April 9, he will impose an additional 50% tariff on US imports from China if Beijing does not lift the 34% tariffs it imposed on American goods last week.
Those Chinese levies were introduced in response to the "reciprocal" 34% tariffs announced by Trump, which were added to the 20% tariffs he implemented earlier this year, raising the average US tariff on Chinese goods to 76%.
"If the tariffs keep going up and up, it becomes a battle of wills and principles rather than economics," said Xu Tianchen, senior economist for China at the Economist Intelligence Unit.
According to Xu Tianchen, since China is already facing a tariff rate exceeding 60%, it doesn't matter whether it increases by 50% or even 500%.
Tariff war
China has stepped up efforts to shield its economy from global market shocks following Trump's declaration of "Liberation Day": several state-owned holding companies pledged to increase investment in stocks, a number of listed companies announced share buybacks, and the central bank vowed to provide liquidity support to the Central Huijin fund after it intervened to prop up falling shares.
However, Trump's tariffs risk derailing China's largely export-driven economic recovery, which began after the end of the COVID-19 pandemic, unless exporters can quickly switch to other markets.
Dan Wang, a China expert at Eurasia Group, said Trump had effectively already wiped out Chinese exporters' profits when US import duties passed the 35% mark.
"After that, China shouldn't export to the US at all. It could be 1,000%, but since there is no trade, there is no harm," the expert emphasized.
According to Dan Wang, Europe is now and will remain the most profitable market for China.
Chinese President Xi Jinping is expected to meet with the Prime Minister of Spain this week. On the agenda will likely be discussions on resolving trade tensions between Beijing and Brussels over the export of Chinese electric vehicles, as well as Trump’s broader tariff escalation.
Xi Jinping will then visit Malaysia, Vietnam, and Cambodia - three economies that benefited from the relocation of Chinese manufacturers seeking to avoid US sanctions during Trump's first term, but which now face steep levies themselves.
Earlier, on April 2, US President Donald Trump announced that starting April 9, he will impose a 10% tariff on all countries and increase levies for certain partners, including China - at 34%. This announcement triggered a global stock market drop, including in both the US and China.
