China’s new tariffs on US goods take effect as Asian markets rally after Trump’s tariff reversal – business live | Business
China’s countermeasures come into effect
Helen Davidson
China’s countermeasures against the US have come into effect, raising tariffs on all US imports to 84% in retaliation against Trump’s tariff hike on Chinese imports to 125%.
The escalating trade war between the world’s two largest economies has reached extraordinary levels of cumulative tariffs and counter-tariffs, with neither side suggesting they’ll back down.
Beijing has vowed to “fight to the end”, refusing to back down in the face of Trump’s efforts to bring the world’s governments to the negotiating table.
China announced reciprocal tariffs of 34% in retaliation to Trump’s first round, on what he termed “liberation day”. Trump warned China to withdraw it or he would raise theirs again. China refused, and the two sides embarked on a series of tit-for-tat raises. With Trump pledging 125% against Chinese imports, Beijing said it would impose 84% on US products, now in effect. It has also put 18 US companies on trade restriction lists, among other countermeasures.
A China Daily editorial published last night says “caving in to the US pressure is out of the question for Beijing”.
“It is not that China does not understand what the unprecedentedly high tariffs mean for its exports and the economy in general. Profits of export-oriented industries will take a blow and the resulting decline in manufacturing investment and consumer sentiment will dampen economic growth.
“But it also knows that kowtowing to the US’ tariff bullying will gain it nothing, given that it is no secret the US is now intent on cutting China out of its consumer market and reshaping the global supply chains to serve its own narrow interests.”
China now appears to be approaching other nations in an apparent attempt to shore up trading agreements away from the US and its punitive tariffs. Markets responded positively to Trump’s pause, including in China. Major Chinese trading markets had mostly weathered the carnage seen across the world earlier this week, apparently due to government interventions.
Key events
Helen Davidson
Earlier this week Chinese state media and foreign ministry were spreading a clip of former US president Ronald Reagan in 1987, decrying tariffs as leading to retaliation and ultimately hurting the US economy, in obvious reference to Trump’s tariff regime.
Today they’re sharing a speech by former Chinese leader Mao Zedong.
“As to how long this war will last, we are not the ones who can decide,” he says. “It used to depend on president Truman, and it will depend on president Eisenhower, or whoever becomes the next US president. It’s up to them.”
“No matter how long this war is going to last, we will never yield,” he says to applause. “We’ll fight until we completely triumph.”
The clip is an excerpt of Mao’s speech to the closing session of the 1953 CPPCC political meeting. He’s referencing the Korean war, during which China supported the North and the US supported the South. But stripped of the specifics, China’s current foreign affairs spokeswoman, Mao Ning, suggests the rhetoric applies today.
“We are Chinese. We are not afraid of provocations. We don’t back down,” she said in the caption.
What impact will the tariffs have?
The head of the WTO said Wednesday that the US-China tariff war could cut trade in goods between the two countries by 80%.
Given the two economic giants account for 3% of world trade, the conflict could “severely damage the global economic outlook”, Ngozi Okonjo-Iweala said.
Analysts expect the levies to take a significant chunk out of China’s GDP, which Beijing’s leadership hope will grow 5% this year, AFP reports.
Likely to be hit hardest are China’s top exports to the United States – everything from electronics and machinery to textiles and clothing, according to the Peterson Institute of International Economics.
And because of the crucial role Chinese goods play in supplying US firms, the tariffs may also hurt American manufacturers and consumers, analysts have warned.
Paul Ashworth, chief North America economist at Capital Economics, said it was “difficult to see either side backing down in the next few days”.
But, he added, “talks will eventually happen, although a full rollback of all the additional tariffs… appear unlikely”.
China’s countermeasures come into effect
Helen Davidson
China’s countermeasures against the US have come into effect, raising tariffs on all US imports to 84% in retaliation against Trump’s tariff hike on Chinese imports to 125%.
The escalating trade war between the world’s two largest economies has reached extraordinary levels of cumulative tariffs and counter-tariffs, with neither side suggesting they’ll back down.
Beijing has vowed to “fight to the end”, refusing to back down in the face of Trump’s efforts to bring the world’s governments to the negotiating table.
China announced reciprocal tariffs of 34% in retaliation to Trump’s first round, on what he termed “liberation day”. Trump warned China to withdraw it or he would raise theirs again. China refused, and the two sides embarked on a series of tit-for-tat raises. With Trump pledging 125% against Chinese imports, Beijing said it would impose 84% on US products, now in effect. It has also put 18 US companies on trade restriction lists, among other countermeasures.
A China Daily editorial published last night says “caving in to the US pressure is out of the question for Beijing”.
“It is not that China does not understand what the unprecedentedly high tariffs mean for its exports and the economy in general. Profits of export-oriented industries will take a blow and the resulting decline in manufacturing investment and consumer sentiment will dampen economic growth.
“But it also knows that kowtowing to the US’ tariff bullying will gain it nothing, given that it is no secret the US is now intent on cutting China out of its consumer market and reshaping the global supply chains to serve its own narrow interests.”
China now appears to be approaching other nations in an apparent attempt to shore up trading agreements away from the US and its punitive tariffs. Markets responded positively to Trump’s pause, including in China. Major Chinese trading markets had mostly weathered the carnage seen across the world earlier this week, apparently due to government interventions.
Japan ‘strongly’ demands US reviews other tariffs
Japan’s government said Thursday it received US Donald Trump’s pause on new tariffs “positively” but still “strongly” demands that Washington reconsider other levies, AFP reports.
“We received the latest US announcement positively,” chief government spokesman Yoshimasa Hayashi told a regular briefing.
But he added: “We continue to strongly demand that the United States reviews measures on its reciprocal tariffs, tariffs on steel and aluminium, and tariffs on vehicles and auto parts.”
Trump’s announcement last week of sweeping “reciprocal” tariffs for a slew of countries included a 24% levy on imports from Japan, the world’s fourth-biggest economy.
Stocks in Indonesia, which was set to be slapped with a 32% tariff, have followed suit with other Asian markets, with the country’s benchmark stock index nearly 5% higher at the open on Thursday after Trump’s 90-day pause.
The Jakarta Composite Index was up 289.2 points, or 4.85%, to 6,257.18 shortly after markets opened on Thursday, two days after stocks tanked more than 7% in their biggest drop since 2011, Reuters reports.
David Smith
Republicans are quietly pushing a procedural rule that would curb the power of the US Congress to override Donald Trump’s chaotic tariff policy.
The House of Representatives’ rules committee on Wednesday approved a measure that would forbid the House from voting on legislation to overturn the president’s recently imposed taxes on foreign imports.
The sleight of hand was embedded in procedural rule legislation setting up debate on a separate issue: the budget resolution that is central to Trump’s agenda.
If adopted, the rule would in effect stall until October a Democratic effort to force a floor vote on a resolution disapproving of the national emergency that Trump declared last week to justify the tariffs. This mirrors a similar tactic used previously to shield Trump’s earlier tariffs.
The move came as Trump announced a major reversal on Wednesday, with a 90-day pause on tariffs for most countries while raising them to 125% for China.
Tariff reprieve provides breathing room, time for negotiations, say Korea and Taiwan
There have been sighs of relief in Asia after Trump announced his 90-day tariff pause, with South Korea’s top trade envoy Cheong In-kyo saying on Thursday the pause had provided room for negotiations, as the country seeks to reduce tariffs through talks.
Cheong met US trade representative Jamieson Greer about lowering tariff rates slapped on the country and delivered concerns about US tariffs, the trade ministry.
Meanwhile in Taiwan, which was due to be hit with a 32% tariff, the foreign minister Lin Chia-lung said the government was dedicated to increasing its purchases from and investments in the United States and to reduce the island’s trade surplus with its most important international backer.
“Now that we have an additional 90 days, we can discuss Taiwan-U.S. economic and trade cooperation in a more detailed and in-depth manner,” he said.
Taiwan President Lai Ching-te on Sunday pledged to seek a zero tariff regime with the US, and said that Taipei would not retaliate in response to the tariffs.
China and the European Union have exchanged views on strengthening their economic and trade cooperation in response to US tariffs, the Chinese commerce ministry said on Thursday, according to Reuters news agency.
In a video call on Tuesday, China’s commerce minister Wang Wentao discussed with European trade and economic security commissioner Maros Sefcovic the restart of talks on trade relief and to immediately carry out negotiations on electric vehicle price commitments, the Chinese ministry statement said.
The conversation came shortly before US President Donald Trump’s additional tariffs on China started taking effect.
The EU had imposed additional tariffs of up to 35.3% on China-made electric vehicles at the end of October after an anti-subsidy investigation, on top of the bloc’s standard 10% car import tariffs.
The commerce ministry said last week that the two sides have agreed to restart negotiations on minimum price commitments on Chinese EVs but did not specify when that would resume.
Markets in Asia have continued to react positively to Trump’s 90-day pause.
In Hong Kong, stocks surged on Thursday, while Shanghai also advanced even as the US president ramped up levies on China.
The Hang Seng Index climbed 2.69%, or 545.94 points, to 20,810.43, while the Shanghai Composite Index jumped 1.29%, or 41.03 points, to 3,227.84.
Here is a look at the full list of tariffs Trump originally threatened – and the new updated rate country by country:
Following other markets in the region, Taiwan stocks surged 9.2% in early trading on Thursday, tracking global markets higher, after US President Trump suspended his highest trade tariffs, except for those on China.
The Taiex index jumped 1,590.79 points to 18,982.55 in the first five minutes of trading, as Taiwanese tech giants TSMC soared 10% and Foxconn 9.8%.
Asia stocks rebound after Trump tariff reversal
Stocks in Asia rebounded strongly on Thursday after US President Donald Trump’s stunning reversal on sweeping reciprocal tariffs.
In Japan, the Nikkei 225 was up 7.2% to 33,999.33, while in Seoul the Kospi was up over 5%. In Australia the ASX 200 jumped more than 6%.
On Wall Street Wednesday, the Dow index soared to close nearly 8% higher while the Nasdaq rose 12.2% to notch its best day in 24 years.
Australia rebuffs China’s appeal to ‘join hands’ in trade
Australia has rebuffed China’s appeal to “join hands” to defend trade on Thursday, as Beijing looks for partners to help it blunt US tariffs now ratcheted up to 125%, according to a report by Agence France-Presse.
Ambassador Xiao Qian urged Australia and other trading partners to “jointly respond to the changes of the world” in an opinion piece written for a Sydney newspaper.
“Under the new circumstances, China stands ready to join hands with Australia,” Xiao wrote for the Sydney Morning Herald.
But Australia’s defence minister Richard Marles was quick to pour cold water on notions of Canberra and Beijing uniting in “common cause”.
“We’re not about to make common cause with China, that’s not what’s going to happen here,” Marles told Australia’s Nine News.
“I don’t think we’ll be holding China’s hand.”
“We don’t want to see a trade war between America and China, to be clear, but our focus is on actually diversifying our trade.”
Tariffs a ‘serious infringement’ on all countries, China’s commerce minister says
Hours before China’s reciprocal tariffs are to take effect, the country’s commerce minister has said the ‘reciprocal tariffs’ by the US are “a serious infringement of the legitimate interests of all countries”.
In a report in Chinese state media Xinhua, an official from the ministry was earlier quoted as saying that no one would win in a trade war.
I want to emphasize that there is no winner in a trade war, and that China does not want a trade war. But the Chinese government will by no means sit by when the legitimate rights and interests of its people are being hurt and deprived,” the official said on Wednesday.
In a stunning U-turn, Trump has reversed high tariffs on most nations – at least for 90 days. But the focus is now on China, the second-biggest provider of US imports, of which the pause does not apply.
Instead, Trump has raised tariffs on China to 125%, while China has announced new tariffs of 84% on all US imports, further escalating a high-stakes confrontation between the world’s two largest economies.
As our China correspondent Amy Hawkins writes in this insightful analysis, China is unlikely to blink first. One of the most helpful factors in Beijing’s favour is the fact that the US is far more dependent on Chinese imports than China is on the US.
For President Xi, there is only one politically viable response to Trump’s latest threat: Bring it on! Having already surprised domestic audiences with a forceful 34% reciprocal tariff, any appearance of backing down would be politically untenable,” says Diana Choyleva, founder and chief economist at Enodo Economics, a forecasting firm.”
Opening summary
Hello, and thanks for following our live coverage of what has been a tumultuous week on global markets, triggered by US President Trump’s shock tariff policy.
The upheaval erased trillions of dollars from stock markets and led to an unsettling surge in US government bond yields that appeared to catch the president’s attention.
Trump has now announced a 90-day pause on the proposed reciprocal tariffs for most countries, except China, whose tariffs he raised to 125% on Wednesday.
Asked about his stunning backtrack, Trump said: “I thought that people were jumping a little out line” and “getting a little bit afraid”.
If you are just getting up to speed, here is the latest on Trump tariffs.
-
Global markets surged after Trump announced his 90-day tariff pause. The S&P 500 surged 5.6%, while the Nasdaq has jumped over 8%. Trump’s Truth Social statement suggests he has backed down on tariffs on most countries for 90 days, applying instead a 10% tariff.
-
However, Trump’s pause does not apply to China, which has announced new tariffs of 84% on imports of all US goods, up from the 34% previously announced, hours after US tariffs on Chinese products went up to a staggering 104%. China’s retaliation sent stock markets falling further with major indices down in the UK, Germany, France and Spain.
-
China’s 84% tariffs on US imports will come into effect at 12.01pm on Thursday, according to Chinese state news agency, Xinhua.
-
The two countries have traded tit-for-tat tariff hikes repeatedly over the past week. “I want to emphasize that there is no winner in a trade war, and that China does not want a trade war. But the Chinese government will by no means sit by when the legitimate rights and interests of its people are being hurt and deprived,” an official of China’s ministry of commerce said in a statement on Wednesday.
-
Addressing reporters at the White House on Wednesday, treasury secretary Scott Bessent said the latest changes in Donald Trump’s tariffs policy was Trump’s “strategy all along.” He said: “This was his strategy all along, and that you might even say that he goaded China into a bad position, they responded.”
-
The WTO chief said the US-China tariff war could reduce trade in goods between the two economic giants by 80%, pulling down the rest of the world economy. Ngozi Okonjo-Iweala said that the US-China tariff war could reduce trade in goods between the two countries by 80%.
-
The EU announced 25% tariffs on a range of US imports in a first round of countermeasures. The 27-member bloc has agreed to impose retaliatory tariffs on €21bn (£18bn) of US goods, targeting farm produce and products from Republican states. All member states voted for the retaliation, with the exception of Hungary.
-
Trump’s 90-day pause on tariffs may not exempt the 25% tariff on cars, Ireland’s deputy prime minister has revealed, after a face-to-face meeting with US commerce secretary Howard Lutnick. Simon Harris, the first EU politician to meet anyone in Trump’s administration since the tariffs were announced last Wednesday, said he spoke to the European trade minister Maroš Šefčovič immediately after his bilateral meeting in Washington today.
-
Trump has in particular targeted the pharmaceutical industry, saying: “We’re going to put tariffs on the pharmaceutical companies, and they’re going to all want to come back.” It’s an idea he has raised before.
-
US markets recovered later on Wednesday after Bessent indicated America was open to trade agreements with allies and a subsequent group deal with China. In his first comments since China’s 84% tariff announcement, Trump urged Americans to “be cool”. The US president bragged about countries “kissing my ass” to negotiate tariffs during a Tuesday-night dinner.
Stock markets soared after Donald Trump shelved plans to hike tariffs on most countries except China, unveiling a 90-day pause and pulling back from his global trade war after days of market turmoil and warnings of recession.
On Wall Street, the benchmark S&P 500 rallied by 9.5% – its biggest single-day increase since 2008.
The Dow Jones industrial average jumped 7.9%. The technology-focused Nasdaq Composite climbed 12.2% – its best day since 2001 – as shares in tech giants like Apple and Nvidia surged.
After insisting for days that he would hold firm on his aggressive trade strategy, Trump announced that all countries that had not retaliated against US tariffs would receive a reprieve – and only face a blanket US tariff of 10% – until July.
Asked why he had ordered the pause, the US president told reporters: “People were jumping a little bit out of line. They were getting yippy.”
As Beijing prepared to slap punishing 84% tariffs on US goods from tomorrow, however, Trump said he would raise US tariffs on Chinese exports to 125% effective immediately.
