The United States and China hurtled towards an all-out trade war Tuesday, locked in a high stakes game of brinkmanship as President Donald Trump prepared to unleash a new wave of tariffs against dozens of partners.
The global economy has been rocked since sweeping 10 percent US tariffs took effect over the weekend, triggering a dramatic market sell-off worldwide and sparking recession fears.
Rates on imports to the United States from dozens of economies are set to rise further at 12.01 am (0401 GMT) Wednesday, and this will see tariffs imposed on Chinese products since Trump returned to the White House reach a staggering 104 percent.
The new tariffs come after Beijing’s pushback against Trump, who remained defiant despite major US indexes tumbling again Tuesday.
The US president believes his policy will revive America’s lost manufacturing base by forcing companies to relocate to the United States.
But many business experts and economists question how quickly — if ever — this can take place, warning of higher inflation as the tariffs raise prices.
Trump said Tuesday the United States was “taking in almost $2 billion a day” from tariffs.
He originally unveiled a 34 percent additional tariff on Chinese goods. But after China unveiled its own 34 percent counter tariff on American products, he vowed to pile on another 50 percent duty.
Counting existing levies imposed in February and March, that would take the cumulative tariff increase for Chinese goods during Trump’s second presidency to 104 percent.
Beijing blasted what it called US blackmail and vowed to “fight it to the end.”
Trump insisted the ball was in China’s court because Beijing “wants to make a deal, badly, but they don’t know how to get it started.”
Separately, Canada said that its tariffs on certain US auto imports will come into force Wednesday.
China ‘confident’
In the war of words between the world’s two biggest economies, China also condemned remarks by US Vice President JD Vance in which he said the United States had for too long borrowed money from “Chinese peasants.”
The European Union sought to cool tensions, with the bloc’s chief Ursula von der Leyen warning against worsening the trade conflict in a call with Chinese Premier Li Qiang.
She stressed stability for the world’s economy, alongside “the need to avoid further escalation,” said an EU readout.
The Chinese premier told von der Leyen that his country could weather the storm, saying it “is fully confident of maintaining sustained and healthy economic development.”
China’s offshore yuan fell to an all-time low against the US dollar Tuesday, while oil prices slumped with the West Texas Intermediate closing below $60 for the first time since April 2021.
The EU — which Trump has criticized bitterly over its tariff regime — may unveil its response next week to new 20 percent levies it faces.
French President Emmanuel Macron called on Trump to reconsider, adding if the EU was forced to respond “so be it.”
In retaliation against US steel and aluminum levies that took effect last month, the EU plans tariffs of up to 25 percent on American goods ranging from soybeans to motorcycles, according to a document seen by AFP.
‘Tailored deals’
Trump said Tuesday his government was working on “tailored deals” with trading partners, with the White House saying it would prioritize allies like Japan and South Korea.
His top trade official Jamieson Greer told the Senate that Argentina, Vietnam and Israel were among those who had offered to reduce their tariffs.
Wall Street’s major indices closed lower Tuesday, with the broad-based S&P 500 falling 1.6 percent.
Europe’s main indices finished with gains however, and Asia’s leading indices rose after heavy falls Monday.
In one public sign of friction over tariffs, key Trump ally Elon Musk described senior White House trade advisor Peter Navarro as “dumber than a sack of bricks.”
Musk, who has signaled his opposition to Trump’s trade policy, hit out after Navarro described his Tesla company as “a car assembler” that wants cheap foreign parts.
Trump has ruled out any pause in his aggressive stance, despite China’s retaliation and growing domestic criticism.
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