China has escalated its trade tensions with the United States by announcing a new 84% tariff on all goods imported from the US, effective from 12:01 am CST on April 10. This decision comes amid a mounting wave of retaliation against President Trump’s “Liberation Day” tariffs. China has imposed export controls on rare earth minerals, further tightening its grip on crucial resources amid ongoing trade disputes.
Today’s announcement is a reversal from previous US government policies, which sought and set trade-deficit-closing tariffs with foreign countries. In 2023, China had a significant services trade deficit of $26.57 billion with the US. This deficit mostly poured out of industries such as insurance, banking, and accounting. The Ministry of Commerce indicates that the US reliance on tariffs is misguided.
China’s Retaliatory Measures
China is re-engaging in the US-China trade war. In order to achieve this, it has used an expansive toolkit of measures, from increasing tariffs on U.S. imports to targeting the export of rare earth minerals. These moves are widely regarded as tit-for-tat reactions to the US tariffs that largely targeted hard goods.
Negative reaction from the Ministry of Commerce
China’s Ministry of Commerce strongly condemned the US government’s actions. Continuing to widely restrict trade, they argued, “The US’s practice of increasing tariffs on China is a mistake over mistake. This severely violates China’s lawful rights and interests and harms the rules-based multilateral trading system. This sentiment speaks to China’s desire to scare the U.S. away from taking action against what it sees as unfair trade practices.
Additionally, Lin Jian, director for the information department of the Ministry of Foreign Affairs underscored that dialogues are key to trade dispute resolution. He stated, “If the US truly wants to resolve issues through dialogue and negotiation, it should adopt an attitude of equality, respect and mutual benefit.”
Trade Balance and Economic Implications
In response to these events, China recently published an extensive white paper. Among other things, it alleges that trade between the two countries is mutually beneficial. The report firmly asserts that the US trade deficit does not indicate an imbalance. Not because they’re neglecting public safety. Rather, it’s because of the larger economic factors in play. Specifically, China is now effectively taxing its exports to the US by 104%.
And the Ministry of Commerce recently issued a statement saying that further raising tariffs would lead to “serious damage.” They would risk igniting even higher inflation in the US, unsettle financial markets, and increase the chance of a US recession. The ministry added, “History and reality prove United States’ tariff escalation can’t solve its problems.” Rather than offering dangerous and ineffective solutions, they focused on what works. Rather, it will cause violent swings in global capital markets.”
ByteDance and Trade Negotiations
As the feud and war rhetoric escalated, representatives from ByteDance picked up the phone to call the White House. They left no doubt that China would not sign off on any agreement until serious talks began over trade and tariffs. This action further highlights the negative effects these tariffs are having on the overall business-to-business relationship between American companies and Chinese government officials.
Some analysts caution that both countries risk locking themselves into a vicious cycle of tit-for-tat escalation. Without serious discussion and compromise, their economic prosperity could be permanently throttled. The stakes couldn’t be higher as each country wrestles with their own domestic political priorities to protect national interests in an increasingly competitive global environment.
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