Wednesday’s tariff respite is firmly in the rearview mirror, as China announced on Friday it was raising its duty on US imports to an astronomical 125%, taking effect Saturday. The announcement came less than 24 hours after the White House clarified that the new levy on Chinese imports would be 145%.
With US President Donald Trump’s collision course with the rest of the world on hold — the EU delayed its planned retaliatory levies Thursday — his fully-fledged trade war with China now has the spotlight to itself. Whereas he dropped tariffs on other countries on Wednesday, the commander-in-chief raised them on Beijing three times within one week, with the White House clarifying on Thursday that the rate is now 145%. After a brief delay, China has now responded in kind.
And just like that. These extraordinary levies are already affecting businesses. US firms have started canceling orders and some Chinese companies are putting staff on temporary leave. Trans-pacific shipping bookings have plunged. The March inflation figures released Thursday suggested that US price growth was easing, but the data was taken before the new China tariffs were implemented. With the levies accelerating skyward, it’s only a matter of time before US prices follow suit.
Markets suffer again. The laws of gravity applied to the markets Thursday — before China announced its latest retaliation — with stocks reversing again as the reality of Trump’s new world trade order set in for investors. The S&P 500 dropped 3.5%, the Dow Jones Industrial Average fell 1,000 points, and the dollar lost ground against the major Asian currencies. On top of all this, Democrats are now questioning whether the president and his allies engaged in insider trading this week. Wednesday’s comeback looks like a fever dream.
The dust won’t settle. Trump acknowledged Thursday that there would be “transition problems” with the markets, while retaining his unfailing optimism that stock would turn around. The former “Apprentice” star added that he was open to extending the 90-day tariff pause on countries that aren’t China, but with Beijing further escalating the trade war, investors will remain unsettled.