White House hikes tariffs on China to 104%, escalating global trade war

The White House confirmed that tariffs of 104% on Chinese goods will take effect this Wednesday (April 9), intensifying the trade standoff between the United States and China. The announcement, made by Press Secretary Karoline Leavitt during an interview with Fox Business, marks a new phase in the escalating tensions that began earlier this month when President Donald Trump unveiled a sweeping tariff package targeting imports from 180 countries. The move against China follows Beijing’s refusal to back down from its retaliatory 34% tariffs on American goods, imposed last Friday (April 4). Trump had set a deadline of 1 p.m. this Tuesday (April 8) for China to relent, threatening further increases if unmet. With no agreement reached, the U.S. government proceeded, and the effects are already rippling through global markets.

The decision caught investors off guard, though uncertainty had already been weighing on stock exchanges since the launch of what has been dubbed the “global tariff surge.” Early Tuesday morning, Chinese officials declared they would not yield to pressure and were prepared to counter any tariff hikes. Beijing’s firm stance underscores its belief that a trade war benefits no one, yet the country vowed to “fight to the end” to protect its interests. Meanwhile, the White House noted that approximately 70 nations have approached the U.S. to negotiate tariff relief, indicating Trump’s administration remains open to dialogue but is holding a hard line against China.

Financial markets reacted swiftly to the news. Asian and European stock exchanges closed higher on Tuesday, buoyed by early hopes that negotiations might avert further conflict. In the U.S., Wall Street’s major indexes opened with significant gains but saw those taper off by early afternoon. In Brazil, the Ibovespa, the main index of the B3 stock exchange, started the day up but reversed course to trade lower, while the dollar climbed back to R$ 6 around 2 p.m. The tariff escalation has reignited fears of a global recession, with analysts warning that international trade could face substantial disruptions in the coming months.

Tariff escalation: an unmet ultimatum

President Donald Trump’s decision to raise tariffs on China to 104% stemmed from a clear ultimatum. Last Friday, he warned of an additional 50% tariff hike if Beijing did not retract its 34% retaliatory duties on U.S. goods. China’s response came swiftly: overnight into Tuesday, the government reaffirmed its position, rejecting any concessions and accusing the U.S. of unfair trade practices. With no phone call or sign of negotiation from China by the Tuesday deadline, Trump followed through, and the White House finalized the measure set to begin on Wednesday.

🇺🇸”Foi um erro da China retaliar. Quando a América é golpeada, ela revida com mais força. É por isso que haverá tarifas de 104% entrando em vigor na China hoje à meia-noite.”

BOOM! 🔥🇺🇸https://t.co/VVMqL5rSdT pic.twitter.com/IjFCQVjWYr

— Brasil Conservador®️🇧🇷🇺🇸🇮🇱100%SDV (@MachadoDarlon) April 8, 2025

This step is among the most aggressive trade moves by the U.S. in recent years. Since early April, when Trump announced tariffs on 180 countries, Asia has borne the brunt, with initial rates pushing taxation on Chinese goods to 54%. The latest increase adds the extra 50% to prior percentages, creating a 104% barrier. The U.S. government justifies this as a means to shield domestic industries and shrink the trade deficit with China, which reached $295 billion in 2023, according to World Bank data.

China has not stood idle. Beyond the 34% tariffs rolled out on Friday, the country imposed export restrictions on rare earths—minerals critical for electronics and advanced technology production. This directly affects U.S. firms reliant on these materials, such as chipmakers and defense contractors. Beijing also suspended poultry imports from two American companies, amplifying the retaliatory nature of its response.

Immediate market fallout

Financial markets felt the tariff hike’s impact as soon as the White House confirmed it. On Tuesday, Asia’s key indexes, like China’s CSI 300 and Hong Kong’s Hang Seng, closed higher, reflecting initial bets that talks might de-escalate tensions. In Europe, the Stoxx 600 rose 2.1%, and the UK’s FTSE 100 gained 1.8%. In the U.S., the S&P 500 jumped 1.5% at the opening bell but trimmed gains to under 0.5% by early afternoon after the tariff news broke.

In Brazil, the mood was less sanguine. The Ibovespa, up 1.2% in the morning, flipped to a 0.8% loss by 2 p.m. The dollar, which had eased in recent days, surged against the real, hitting R$ 6—a level unseen since early March. The currency’s rise signals investors flocking to safety amid global uncertainty. Analysts suggest this volatility could linger, especially if other nations follow China’s lead and retaliate against the U.S.

Market jitters stem from fears of a full-blown trade war. Global trade, valued at roughly $100 trillion annually, could shrink by 1% in 2025, per World Trade Organization (WTO) estimates. The hit would deepen if U.S.-China tensions worsen, disrupting supply chains and driving up production costs across industries.

Products hit by the new tariffs

The 104% U.S. tariffs target a broad swath of Chinese goods, from consumer items to industrial products. Key categories include:

• Electronics, such as smartphones and laptops, reliant on Chinese-made components.
• Textiles, including clothing and footwear, a major chunk of China’s exports to the U.S.
• Machinery and industrial equipment, vital to American manufacturing.
• Processed agricultural goods, like canned foods and beverages.

China’s retaliatory 34% tariffs zero in on U.S. agricultural products—soybeans, meat, and corn—along with fossil fuels like coal and liquefied natural gas. The rare earth export curbs add a strategic twist, given that the U.S. sources about 80% of these minerals from China.

Historical backdrop of the trade war

The U.S.-China trade clash is far from new. During Trump’s first term (2017–2021), the two nations waged a trade war that saw tariffs slapped on hundreds of billions in goods. In 2018, the U.S. levied 25% duties on steel and 10% on aluminum, prompting China to hit back with tariffs on American farm products. A 2020 deal aimed to boost Chinese purchases of U.S. goods by $200 billion, but the covid-19 pandemic derailed progress, and the trade deficit ballooned to $361 billion by 2024.

In Trump’s second term, the approach has grown bolder. The April rollout of tariffs on 180 countries kicked off the “global tariff surge,” with China facing the steepest rates from the start. The jump to 104% underscores Trump’s resolve to pressure Beijing, which aims to cement its role as a global economic powerhouse and top trading partner to over 120 nations.

Unlike past clashes, China now appears better prepared. Its reliance on foreign trade has dropped, with imports and exports accounting for 37% of GDP, down from 60% in the early 2000s. This shift gives Beijing more cushion to weather U.S. tariffs, though a broader escalation still poses risks.

Global reactions to the tariff surge

The U.S. move to 104% tariffs on China has drawn attention worldwide. Canada, hit with 25% tariffs in February, rolled out phased retaliation on $107 billion in U.S. goods. Mexico, also facing 25%, is gearing up for further measures, while the European Union (EU) warned it’s ready to act if Trump ramps up its 20% tariffs. EU Commission President Ursula von der Leyen called U.S. trade policy a “step in the wrong direction,” hinting at a robust bloc response.

In Asia, nations like Vietnam and Thailand—beneficiaries of supply chain shifts from China—watch warily. ASEAN exports to the U.S. doubled from $158 billion in 2016 to $336 billion in 2022, but the tariff upheaval could scramble trade flows. The UK, under a 10% tariff, seeks a bilateral deal to soften the blow, leveraging its post-Brexit flexibility.

Brazil holds a relative edge. With a modest 10% tariff—the lowest announced—it could gain U.S. market share over rivals like China and India (26%). Soybeans and beef exports stand to benefit, especially if China shifts purchases away from the U.S., as it did in 2018.

Trade and economic fallout in the U.S. and beyond

The 104% tariffs on China will reshape global trade. The U.S., the world’s top buyer, imported $2.2 trillion in goods from Canada, Mexico, and China in 2024—40% of its foreign trade. The new barriers may cut this flow but will hike costs for American consumers and firms. Economists project a 30% price spike for Asian goods like electronics and machinery, fueling domestic inflation.

Trump’s policy aims to bolster U.S. industry. Since March, the administration claims an 18% drop in the trade deficit, with 327 new factories opening in key states. Yet reliance on imported inputs, like Chinese chips, could cap gains. Tech giants like Apple and Nvidia saw shares drop over 7% last week, highlighting sector risks.

For China, the stakes are high but manageable. It exports four times more to the U.S. than it imports, and sales to America fell 22% last quarter. Still, Beijing’s pivot to new trade partners and domestic demand could soften the blow long-term.

Brazil’s gains and risks

In Brazil, Trump’s tariff surge brings both promise and peril. Higher taxes on rivals like China and India could boost Brazilian exports—commodities like soybeans and steel—to the U.S. In 2024, the U.S.-Brazil trade balance favored America by $7.3 billion, keeping Brazil off the tariff hit list’s top tier. A China pivot to Brazilian soybeans could echo 2018 gains.

Yet global instability threatens Brazil’s growth. The dollar’s climb to R$ 6 on Tuesday raises import costs and inflation, challenging the Central Bank’s price control efforts. A U.S. or Chinese slowdown—key markets for Brazil’s iron ore and meat—could dent demand.

Embraer, Brazil’s aircraft maker, faces direct risks. With a strong U.S. presence, it could see higher costs and lost edge. Brazil’s government plans talks with Washington to shield steel and aluminum, past tariff targets.

Tariff timeline: key dates so far

Trump’s “global tariff surge” has unfolded rapidly. Here’s the rundown:

• April 2: Tariffs hit 180 countries—34% on China, 25% on Canada and Mexico, 20% on the EU.
• April 4: China retaliates with 34% duties on U.S. goods.
• April 7: Trump threatens an extra 50% on China unless it backs off by April 8.
• April 9: 104% tariffs on China take effect, per White House confirmation.

Next moves hinge on global responses. China may unveil fresh retaliation soon, while Canada and Mexico adjust plans. The EU could detail its counterstrategy this week.

Industries most at risk

The U.S.-China tariff clash endangers key sectors. In the U.S., tech relies heavily on Chinese components, with chipmakers like Nvidia and Intel facing cost hikes and supply woes. The auto industry, with U.S. firms producing in Mexico, grapples with 25% tariffs.

In China, electronics and textile exporters—20% of whose sales go to the U.S.—face steep losses. Small and mid-sized firms may struggle most. Rare earth curbs could also hit global renewable energy and defense sectors.

Brazil’s agribusiness watches closely. Soybeans and meat could gain, but a global downturn might slash commodity demand and prices.

Negotiations: a way out?

Amid the escalation, talks offer hope. The White House says 70 countries have sought tariff relief discussions, including Canada and the UK. Canadian PM Justin Trudeau met Trump in December at Mar-a-Lago, but 25% tariffs held firm. Mexico signals openness but preps retaliation if talks falter.

With China, progress is elusive. Trump has said he wants to work with Xi Jinping on issues like fentanyl and Ukraine, yet no direct talks have occurred since January’s inauguration. Unlike his first term’s early thaw with China, this standoff lacks dialogue.

Analysts see China in wait-and-see mode, eyeing a U.S. trade probe launched on Trump’s first day. The probe could spark more tariffs or a deal to defuse tensions. For now, Beijing’s “fight to the end” stance suggests any talks must be on equal footing.