The tit-for-tat tariff war between the US and China escalated to a new level with Beijing raising tariffs on all US goods from 84 per cent to 125 per cent starting April 12 after the White House announced its decision to raise levies on Chinese goods to 145 per cent.
The US reaction to the latest round of Chinese retaliation was not known till late on Friday night (IST), but Beijing indicated that it would not respond to further tariff hikes by the US.
“Given that American goods are no longer marketable in China under the current tariff rates, if the US further raises tariffs on Chinese exports, China will disregard such measures,” the Chinese finance ministry said in a statement.
The Chinese commerce ministry said Washington’s repeated use of excessively high tariffs has become little more than a numbers game — economically meaningless and revealing its use of tariffs as a tool for bullying and coercion. “It’s become a joke,” the ministry said, reported Bloomberg.
According to the report, China also warned that it will “resolutely counterattack and fight to the end” if the US substantially infringes on its rights and interests. It also said America should take full responsibility for the damage caused by the tariffs.
With tariffs at such levels now, the trade between two of the world’s largest economies — worth more than $650 billion in 2024 — is likely to come to a grinding halt, which may play havoc on the global economy.
Amid the uncertainties looming over international trade, global stocks fell, the dollar slid and a sell-off in US government bonds picked up pace on Friday and gold, a safe haven for investors in times of crisis, scaled a record high. S&P 500 futures fell alongside European stocks after China’s announcement, while futures on the Hang Seng China Enterprises Index pared gains.
There were also speculations on whether China or the US will make the move to deescalate first. Trump has said he’s “waiting” for a call from Beijing, while Chinese officials have repeatedly said they’re open to negotiations but won’t be bullied into talking.
President Xi Jinping on Friday made his first public remarks on the escalating trade war, saying China remains confident and unafraid of any “unjustified suppression”.
“One that goes against the world risks being isolated themselves,” Xi told visiting Spanish Prime Minister Pedro Sanchez.
Amid the visit of the Spanish Prime Minister — whom Xi thanked for visiting the country — South China Morning Post reported, quoting unnamed sources, that European Union leaders are planning to travel to Beijing for a summit with the Chinese President in late July.
Though no date was confirmed, the EU leaders’ willingness to make the trip, analysts said, was significant as it indicated a serious effort to re-engage with Beijing at a time when the bloc’s relationship with the US, a traditional ally, has effectively collapsed.
South East Asia visit
The Hong Kong based English daily also reported that Xi will be setting off on a tour of three SoutheastAsian countries next week in an apparent attempt to strengthen Beijing’s ties with its neighbours amid the intensifying tariff war with Washington.
The Chinese foreign ministry said on Friday that Xi would visit Vietnam on Monday, followed by Malaysiaand Cambodia — his first foreign visits this year — from Tuesday to Friday.
The move to visit these countries — which till now have expressed willingness to negotiate with the US instead of retaliating — assumes significance as it captures China’s attempt to present itself as a credible partner for Southeast Asia.