Donald Trump Tariffs: China Vows to Fight Back
The trade war has significant implications for global markets, with the potential to raise the likelihood of recession and wipe trillions of dollars off the market value of major firms. As the situation continues to unfold, it remains to be seen how the US and China will navigate the complex web of tariffs and trade agreements.
European markets rebounded on Tuesday as China vowed to fight US tariffs, with the FTSE 100 rising 1% and France's Cac 40 index increasing by 1.8%, despite the escalating trade war between the US and China that has hammered markets and raised the likelihood of recession.
China's commerce ministry accused the US of blackmail, calling the tariffs a "typical unilateral bullying practice." The US had threatened to impose a 50% tariff on Chinese goods if China didn't withdraw its retaliatory tariff. China's state-owned firms pledged to support financial markets, and the country's financial regulator plans to increase the proportion of insurance funds investing in the stock market.
The trade war between the US and China has significant implications for both countries, with China raising tariffs on US goods to 84% in response to President Trump's tariffs on Chinese goods. This move is expected to make it more expensive for Chinese companies to import US-made goods, potentially cutting off US producers from a significant trade market. The US was China's third-largest export market in 2023, with $145 billion worth of goods shipped.
US President Donald Trump has announced a 90-day pause on new tariffs on imports from China, effective immediately, and will lower tariffs on other countries subject to his new targeted duties. However, the US has raised tariffs on Chinese imports to 125pc and has also imposed duties on dozens of other countries, leading to a global trade war that has wiped trillions of dollars off the market value of major firms.
As the trade war continues to escalate, China has vowed to "fight to the end" against Trump's aggressive trade policy and has diversified its relationships with countries in Europe, Africa, Southeast Asia, and Latin America. The Chinese government has also announced plans to "tariff-proof" its economy by boosting consumption and investing in key industries, in an effort to mitigate the impact of the tariffs.