China will impose 84% tariffs on U.S. goods from Thursday, up from the 34% previously announced, its finance ministry said on Wednesday, firing the latest salvo in a global trade war sparked by U.S. President Donald Trump.
Trump’s “reciprocal” tariffs on dozens of countries took effect earlier on Wednesday, including massive 104% duties on Chinese goods, reports Reuters.
The European Union is also preparing its own retaliatory measures for later on Wednesday.
Trump’s punishing tariffs have shaken a global trading order that has persisted for decades, raised fears of recession and wiped trillions of dollars off the market value of major firms.
Trump nearly doubled duties on Chinese imports, which had been set at 54% last week, in response to previous counter-tariffs from Beijing.
Earlier in the day, China called its trade surplus with the United States an inevitability and warned it had the “determination and means” to continue the fight if Trump kept hitting Chinese goods.
China’s currency has faced heavy downward pressure, with the offshore yuan at record lows due to the tariffs, but sources told Reuters the central bank has asked major state-owned banks to reduce U.S. dollar purchases and will not allow sharp yuan declines.
Meanwhile, China told the World Trade Organization that the United States’ tariffs threatened to further destabilise global trade.
“The situation has dangerously escalated. …As one of the affected members, China expresses grave concern and firm opposition to this reckless move,” China said in a statement to the WTO on Wednesday that was sent to Reuters by the Chinese mission to the WTO.
Market rout
Since Trump unveiled his tariffs last Wednesday, the S&P 500 (.SPX) has suffered its deepest loss since the benchmark’s creation in the 1950s. It is now nearing a bear market, defined as 20% below its most recent high.
U.S. Treasuries were also caught up in the market turmoil and extended heavy losses on Wednesday in a sign investors are dumping even their safest assets and the dollar, a traditional safe-haven, was weaker against other major currencies.
According to Reuters, European shares fell and U.S. stock futures pointed to more pain ahead, following a grim session for most of Asia.
Trump has shrugged off the market rout and offered investors mixed signals about whether the tariffs will remain in the long term, describing them as “permanent” but also boasting that they are pressuring other leaders to ask for negotiations.
European Union countries are expected to approve the bloc’s first countermeasures against Trump’s tariffs on Wednesday, joining China and Canada in pushing back.
The European Commission, which coordinates EU trade policy, has proposed extra duties, mostly of 25%, on a range of U.S. imports from motorcycles, poultry, fruit, wood, and clothing to dental floss, according to a document seen by Reuters. They are to enter into force in stages.
