US-China
trade war intensifies as Beijing’s tariffs come into effect after Trump pause
China’s 84%
tariffs against US products comes into force amid market relief at Donald
Trump’s move to pause steep reciprocal tariffs around the world
Helen
Davidson in Taipei
Thu 10 Apr
2025 01.38 EDT
Donald
Trump’s trade war with China entered a new phase on Thursday, as Beijing’s 84%
retaliatory tariffs came into effect hours after the US president announced a
pause of steep reciprocal tariffs on dozens of countries except China.
Markets
rebounded after Trump’s announcement of the sudden pause, after the most
volatile episode in financial markets since the pandemic.
Taiwan
stocks surged 9.2% in early trading on Thursday. In Japan, the Nikkei 225 was
up 7.2%, while in Seoul the Kospi was up over 5%. In Australia the ASX 200
jumped more than 6%. Hong Kong’s Hang Seng Index climbed 2.69%, while the
Shanghai Composite Index jumped 1.29%.
On Wall
Street on Wednesday, the Dow index soared to close nearly 8% higher while the
Nasdaq rose 12.2% to notch its best day in 24 years, after the announcement of
the pause.
However,
tariffs against Chinese goods now stand at 125%, and Beijing has vowed to
“fight to the end”. A China Daily editorial published on Wednesday night said
“caving in to the US pressure is out of the question for Beijing”.
The head of
the WTO said on Wednesday that an escalating US-China tariff war could cut
trade in goods between the two countries by 80%. Given the two economic giants
account for 3% of world trade, the conflict could “severely damage the global
economic outlook”, Ngozi Okonjo-Iweala said.
Trump’s
sudden change of heart, amid growing fears the US was headed towards a
recession, saw a dramatic revival in share markets across Asia. The US
president’s 90-day pause maintained the blanket global 10% tariff but halted
the steeper reciprocal tariffs.
“I thought
that people were jumping a little bit out of line, they were getting yippy, you
know,” Trump said on Wednesday when asked why he had announced the pause.
Beijing said
on Wednesday it would impose 84% on US products from midday local time on
Thursday, put 18 US companies on trade restriction lists, and bring in other
countermeasures. It came after Trump’s “liberation day” announcement of a
global tariff regime, which added a 34% tariff to the 20% already levelled at
China, prompting Beijing to announce reciprocal tariffs of 34%.
Trump warned
China to withdraw it or he would respond but China refused, and the two sides
embarked on a series of tit-for-tat raises. Trump pledged a levy of 104% and
then 125% against Chinese imports, and left them in place while announcing a
reprieve elsewhere.
“At some
point, hopefully in the near future, China will realise that the days of
ripping off the USA, and other countries, is no longer sustainable or
acceptable,” Trump wrote, as he unveiled the latest US tariff assault on China.
The China
Daily editorial on Wednesday said: “It is not that China does not understand
what the unprecedentedly high tariffs mean for its exports and the economy in
general.
“Profits of
export-oriented industries will take a blow and the resulting decline in
manufacturing investment and consumer sentiment will dampen economic growth.
But it also knows that kowtowing to the US’s tariff bullying will gain it
nothing, given that it is no secret the US is now intent on cutting China out
of its consumer market and reshaping the global supply chains to serve its own
narrow interests.”
China
appears to be approaching other countries in an apparent attempt to shore up
trading agreements away from the US.
China’s
commerce minister, Wang Wentao, has said in talks with his Malaysian
counterpart that they’re willing to work with Asean trading partners to
strengthen coordination. He also spoke to the EU trade and security
commissioner on Tuesday, saying China was willing to deepen trade, investment
and industrial cooperation, and that China and the EU will immediately restart
negotiations on electric vehicles.
Meanwhile
attempts to “join hands” with Australia – which relies heavily on China for
trade but has a deep alliance with the US – were rebuffed by the country’s
defence minister, Richard Marles.
“We’re not
about to make common cause with China, that’s not what’s going to happen here,”
Marles told local media. “We don’t want to see a trade war between America and
China, to be clear, but our focus is on actually diversifying our trade.”
Trump has
dismissed the market volatility, saying “sometimes you have to take medicine”,
but appeared to waver as predictions of a US recession grew stronger.
World
governments which were facing higher export tariffs welcomed Trump’s pause, but
many are still affected by sector-based tariffs.
“We received
the latest US announcement positively,” Japan’s chief government spokesperson,
Yoshimasa Hayashi, told a regular briefing. But he added: “We continue to
strongly demand that the United States reviews measures on its reciprocal
tariffs, tariffs on steel and aluminium, and tariffs on vehicles and auto
parts.”
EU member
states, meanwhile, had approved retaliatory 25% tariffs on up to $23bn in US
goods – targeting farm produce and products from Republican states – from next
week, in response to sweeping tariffs on steel and aluminium imposed by Trump
last month.
Trump
announced his decision at the same time as a congressional hearing featuring
Jamieson Greer, his US trade representative.
“It looks
like your boss just pulled the rug out from under you,” the Democratic
representative Steven Horsford of Nevada told Greer. “This is amateur hour, and
it needs to stop.”
Agencies
contributed to this report
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