China hits US with 84% tariffs after Trump’s ultimatum

Tensions between the world’s two largest economies reached a boiling point on Wednesday, April 9, when China unveiled plans to impose 84% tariffs on goods imported from the United States, effective as of Thursday, April 10. This sharp increase, up 50% from the previously announced 34% rate, comes as a direct countermeasure to the United States’ decision to levy 104% tariffs on Chinese imports, enacted on the same day. The escalating trade war, fueled by a series of retaliatory measures, has sent shockwaves through global markets and raised fears of widespread economic fallout. The conflict ignited last week when President Donald Trump outlined a sweeping tariff plan targeting over 180 countries, with China facing some of the steepest rates, amplifying a rivalry that now threatens to reshape international trade.

China’s response was swift and resolute following the initial U.S. move. On Friday, April 4, Beijing imposed 34% tariffs on all American imports, mirroring the rates Washington had set. Unfazed, the U.S. upped the ante with an ultimatum: Trump demanded that China retract its tariffs by noon Brasília time on Wednesday, April 8, or face an additional 50% hike, pushing the total to 104%. When China stood firm, the White House followed through, confirming the increase late Wednesday afternoon. Hours later, China’s Ministry of Finance fired back with the 84% tariff announcement, cementing a tit-for-tat escalation that has analysts warning of dire consequences for consumers and businesses alike. Financial markets, already jittery, saw steep declines as investors braced for the fallout.

The ripple effects are undeniable. Asian, European, and American stock indexes tumbled, while oil prices hit a four-year low, driven by fears of a global slowdown. China bolstered its stance with a detailed report on its trade relations with the U.S., accusing Washington of coercive tactics and vowing to resist what it calls bullying. Meanwhile, Trump remains optimistic, asserting that the tariffs will force concessions and boost U.S. manufacturing, though experts caution that rising costs and inflation could undermine those gains. As the standoff deepens, both nations appear entrenched, leaving the world to grapple with the uncertainty of a prolonged trade conflict.

Roots of the tariff clash

The origins of this trade war trace back to a series of calculated moves that unfolded over the past week. On April 2, Trump unveiled a tariff framework ranging from 10% to 50%, targeting over 180 countries, with China initially hit by a 34% rate on top of an existing 20%, bringing the total to 54%. The president framed the measures as a bid to reindustrialize America and address what he deems unfair trade practices, particularly from China, which has long maintained a substantial trade surplus with the U.S. The announcement set off a chain reaction, with Beijing retaliating just two days later, on April 4, by slapping 34% tariffs on all U.S. goods.

Trump’s next step came with a deadline: China had until midday on April 8 to back down, or the U.S. would raise its tariffs by another 50%. When China refused, the U.S. implemented the 104% rate on April 9, effective immediately. China’s counterpunch followed in the early hours of April 10, with the 84% tariffs confirmed after a day of defiance. This rapid escalation builds on years of friction. During Trump’s first term, tariffs on Chinese goods became a hallmark of his policy, a trend continued under Joe Biden. Last year, the U.S. trade deficit with China stood at 295 billion dollars, roughly 1% of America’s GDP, though reliance on Chinese imports dropped from 21% in 2016 to 13% by 2024.

The stakes are high for both sides. China’s export-driven economy faces pressure from the U.S. market’s reduced accessibility, while American consumers brace for higher prices on everyday goods. The back-and-forth reflects not just economic rivalry but a broader struggle for global dominance, with each nation leveraging tariffs as a weapon in an increasingly hostile standoff.

Global reaction to the trade war

As China and the United States exchange punishing tariffs, the rest of the world watches with growing alarm. Financial markets felt the strain immediately. Japan’s Nikkei 225 index plummeted before a partial rebound following a call between Trump and Prime Minister Shigeru Ishiba, hinting at potential trade talks. European markets weren’t as fortunate, with steep declines signaling widespread unease over disrupted supply chains and rising costs. The price of Brent crude oil fell to 62.74 dollars per barrel, its lowest since early 2021, underscoring fears of shrinking global demand.

China took its case to the World Trade Organization (WTO), voicing “deep concern” over the U.S. tariffs. In a statement, Beijing warned that the measures jeopardize the multilateral trading system and called them reckless, urging collective opposition. The European Union, meanwhile, is gearing up to retaliate, with the European Commission proposing tariffs of up to 25% on U.S. goods. Leaders like Ursula von der Leyen have stressed the need for a balanced trade framework, pushing for dialogue to avert further chaos.

Beyond the major players, smaller economies are adjusting to the fallout. Canada imposed 25% tariffs on select U.S. vehicles in response to Trump’s policies, while Thailand considers tweaking its import rates. New Zealand slashed interest rates to shield its economy from the uncertainty, a move echoed by other nations bracing for turbulence. The global response highlights the far-reaching implications of the U.S.-China clash, with fears mounting that a wave of protectionism could unravel decades of trade integration.

Key products hit by the tariffs

The tariff war targets a broad swath of goods, reshaping trade flows between the two nations. The U.S.’s 104% rates affect all Chinese imports, including:

• Electronics such as smartphones and computer parts;
• Textiles and clothing;
• Industrial machinery and auto components;
• Solar panels and household items like toys and appliances.

China’s 84% tariffs strike back at critical U.S. sectors, such as:

• Agricultural products, including soybeans, corn, and pork;
• Automobiles and spare parts;
• Chemicals and pharmaceuticals;
• Tech goods like semiconductors and telecom equipment.

These measures threaten to drive up costs for consumers and disrupt supply chains that rely on the seamless exchange between the two economies.

Immediate economic fallout

The steep tariffs are already leaving their mark on both economies. In the U.S., the 104% rates on Chinese goods could inflate prices for consumers, challenging Trump’s narrative of economic revitalization. Estimates suggest American households might lose up to 3,800 dollars in annual purchasing power due to the tariff hikes, a significant hit given that consumption drives about 70% of the U.S. economy. Retailers and manufacturers face mounting pressure to either absorb the costs or pass them on, risking a spike in inflation.

China isn’t immune to the pain. Analysts at Citi downgraded the country’s 2025 GDP growth forecast from 4.7% to 4.2%, citing the trade war’s external pressures. Beijing is mobilizing to cushion the blow, with top officials meeting on April 9 to explore stimulus options and shore up financial markets. Speculation about a yuan devaluation has surfaced as a possible tactic to offset export losses, though such a move could further inflame tensions with the U.S.

Globally, the fallout is stark. Oil prices continued their slide, with WTI dropping to 59.44 dollars per barrel, reflecting a dimming outlook for energy demand. Banks like Wells Fargo now project slower U.S. growth in 2025, while the specter of a recession looms larger with each tariff hike. The economic turbulence underscores the high stakes of this standoff, with no clear winner in sight.

Official stances from China and the US

Trump remains steadfast in his approach. On April 8, he described the tariffs as “somewhat explosive” but necessary to force fair trade, predicting that China would soon seek a deal. He directed his trade team to pursue tailored agreements with willing nations, framing the tariffs as a broader strategy to bolster American industry. Yet, his insistence on unilateral concessions has drawn skepticism about the feasibility of quick resolutions.

China, meanwhile, stands defiant. A Foreign Ministry spokesperson emphasized readiness to negotiate, but only on terms of “equality, respect, and mutual benefit.” Beijing accuses the U.S. of wielding tariffs as a cudgel, a tactic it vows never to accept. The early Thursday report reinforced this position, outlining how U.S. policies breach international norms and pledging to fight back as long as necessary. The contrasting rhetoric reveals a deep divide, with little room for compromise in the near term.

Supply chain disruptions

The trade war’s toll on global supply chains is profound. U.S. firms like Apple are scrambling to offset the 104% tariffs, with plans to ramp up iPhone production in India. However, shifting manufacturing back to the U.S. remains impractical due to higher costs. The “China Plus One” strategy, adopted by many companies to diversify sourcing, faces limits as tariffs persist. In China, exporters in hubs like Yiwu are pivoting to markets like the Middle East, though price hikes loom as tariffs bite.

Other nations feel the strain too. Vietnam and Mexico, beneficiaries of prior U.S.-China tensions, now risk being caught in Trump’s tariff net, threatening recent investments. Companies are shifting focus from efficiency to resilience, a costly pivot that could take years to fully realize.

Responses from other nations

The U.S.’s tariff blitz has spurred a global reaction. The EU is poised to impose up to 25% tariffs on American goods, while seeking to align with China on stabilizing trade. Canada hit back with 25% tariffs on U.S. vehicles effective April 9, with Prime Minister Mark Carney signaling a firm stance. South Korea dispatched its trade minister to Washington to negotiate relief from its 25% rate, and Japan explores a bilateral deal post-Trump-Ishiba talks.

Smaller economies are adapting too. Thailand mulls import adjustments, and New Zealand’s interest rate cut reflects broader defensive moves. The risk of a global tariff spiral grows, potentially fracturing the open trade system.

Timeline of the tariff escalation

Key events in the trade war unfolded as follows:

• April 2: Trump announces tariffs of 10%–50%, with 34% on China atop 20% already in place.
• April 4: China retaliates with 34% tariffs on all U.S. goods.
• April 8: Trump issues ultimatum for China to retract tariffs or face a 50% hike.
• April 9: U.S. enacts 104% tariffs; China responds with 84%, effective April 10.

This rapid timeline underscores the conflict’s intensity and unpredictability.

Outlook for global trade

The U.S.-China trade war casts a long shadow over global commerce. The 104% and 84% tariffs could force a realignment of supply chains, though the transition will be expensive and slow. U.S. consumers face higher prices, while China eyes new markets and internal stimulus. The lack of dialogue and mutual resolve to escalate suggest a protracted battle, with recession risks mounting as markets falter.

Vulnerable sectors

U.S. agriculture, reliant on China for soybeans and pork, faces steep losses from the 84% tariffs. Tech and retail sectors brace for cost increases, while China’s manufacturing and solar industries grapple with the 104% U.S. rates. Both nations’ consumers will bear the brunt of pricier goods.