China has announced that it will enforce reciprocal 34% tariffs on all imports from the United States starting April 10, following through on its vow to retaliate after President Donald Trump intensified the ongoing global trade war.
Earlier this week, Trump imposed a new 34% tariff on all Chinese products entering the US. This decision is expected to drastically shift the dynamics of US-China relations and exacerbate already tense trade disagreements between the world’s two leading economies.
“This practice of the US is not in line with international trade rules, seriously undermines China’s legitimate rights and interests, and is a typical unilateral bullying practice,” the State Council Tariff Commission of China said in a statement announcing its retaliatory move.
Since returning to office in January, Trump has already implemented two rounds of 10% additional tariffs on all goods imported from China. According to the White House, these tariffs were introduced to curb the flow of illicit fentanyl from China to the US. When combined with existing duties, Chinese products are now facing a total tariff burden of more than 54% when arriving at American ports.
In contrast to previous measured responses, China’s latest round of retaliatory tariffs marks a broader and more aggressive reaction. While past responses from Beijing included targeted tariffs on US exports such as agricultural goods and energy, as well as regulatory actions against American businesses, this new round signals a significant escalation.
“This is a significant escalation of China’s response,” wrote Leah Fahy, a China economist at Capital Economics. “Xi Jinping appears to feel that China’s economy is strong enough to withstand whatever Trump throws at it next.”
The newly announced US tariffs are steeper than many experts had predicted and have the potential to fundamentally alter the trade relationship between Washington and Beijing. With nearly $500 billion in trade hanging in the balance, the new measures could disrupt long-standing economic ties that developed over decades of interdependence.
China unveiled its countermeasures on Friday, during a major national holiday known as the Tomb Sweeping Festival. These steps included adding 11 American companies to its “unreliable entity list,” which targets businesses seen as threats to Chinese interests. Some of the affected companies include drone manufacturers. Additionally, 16 US firms will now face export restrictions, barring them from acquiring Chinese-made dual-use items.
China’s Commerce Ministry also announced new anti-dumping investigations targeting CT X-ray tubes imported from the US and India, marking a direct challenge to both countries’ medical equipment exports.
Furthermore, China revealed new export controls on seven types of rare-earth minerals, such as samarium, gadolinium, and terbium, effectively limiting their supply to the US. These elements are critical in high-tech industries and national defense systems.
The market reaction to China’s announcement was swift and severe. US stocks fell sharply on Friday. The Dow Jones Industrial Average plummeted by more than 1,000 points, or 2.7%. The S&P 500 dropped over 3%, while the Nasdaq Composite slid by 3.5%. European and UK markets were similarly affected, with major indices falling more than 3%, marking their worst performance in years.
Investors had been anxious all week. On Thursday, the Dow fell by over 1,600 points, nearly 4%, while the S&P 500 lost close to 5%, and the Nasdaq plunged almost 6%. These declines represent the steepest one-day losses in about five years, comparable to the market turmoil during the COVID-19 pandemic.
US Secretary of State Marco Rubio acknowledged the economic impact. “Markets are crashing,” he said on Friday, addressing reporters at a NATO foreign ministers’ meeting in Brussels. However, he added, “the markets will adjust.”
“Businesses around the world, including in trade and global trade, they just need to know what the rules are. Once they know what the rules are, they will adjust to those rules,” Rubio said.
Global investors are increasingly concerned that this spiraling trade war could push not only the US but also the global economy into a recession.
“By matching Trump’s tariffs, China is no longer nibbling at the edges — it’s mirroring US actions head-on. This is not blind retaliation, but a clear recalibration,” said Craig Singleton, a senior fellow at the Foundation for Defense of Democracies, based in the US.
Singleton pointed out that China is targeting politically sensitive sectors, including agriculture, industrial goods, and rare earth materials, as well as expanding the “unreliable entity list.” Despite these aggressive measures, China appears to be keeping its broader economy relatively open.
Meanwhile, companies that rely on supply chains deeply embedded in China are facing a complex and difficult situation. These businesses must now navigate not only the new US tariffs on Chinese imports but also tariffs affecting other Asian nations due to the broad nature of Trump’s policies.
The timing of these tariffs presents additional challenges for China, which is already grappling with a slowing domestic economy. In recent weeks, Chinese officials have ramped up efforts to stimulate internal consumption in preparation for the anticipated impact of an expanded trade conflict.
Larry Hu, chief China economist at Macquarie Group, noted in a research note that Trump has effectively raised the average tariff on Chinese goods to 69%. When Trump began his current term in January, the average rate was around 15%.
Hu estimates the latest escalation could cut up to 2.5 percentage points from China’s economic growth for 2025. “The impact could manifest itself through multiple channels such as falling US demand for Chinese goods, the potential global economic slowdown and the hit on export re-routing,” Hu wrote.
Export re-routing involves exporting goods to a third country instead of directly to their intended destination, often to avoid tariffs. This strategy was employed during Trump’s first term, with countries in Southeast Asia and Latin America acting as intermediaries for Chinese exports.
To achieve its growth target of approximately 5% in 2025, China will need to adopt strategies to boost internal demand and cushion the blow of these external pressures, according to Hu.
In summary, the US-China trade war has entered a more aggressive phase. With both sides enacting sweeping tariff increases and expanding their retaliatory toolkits, the economic consequences could be far-reaching. The coming months will likely test the resilience of global markets, international supply chains, and the political resolve of both governments.