US President Donald Trump’s punitive tariffs on dozens of economies took effect on Wednesday, including a tax of more than 100 percent on Chinese goods, dramatically escalating a devastating global trade war.
Tariffs on imports to the United States from exporters such as the European Union (EU) or Japan rose further at 12:01 a.m. (0401 GMT) on Wednesday after sweeping 10 percent tariffs that took effect over the weekend rocked the global economy. China, Washington’s top economic rival but also a major trading partner, has been hit hardest. Tariffs on Chinese products have now reached a staggering 104 percent since Trump returned to the White House.
Trump said Tuesday his government was working on “favorable deals” with trading partners, saying the White House would prioritize allies like Japan and South Korea. His top trade official, Jamieson Greer, also told the Senate that Argentina, Vietnam and Israel had offered to reduce their taxes. At a dinner with fellow Republicans on Tuesday night, Trump said the countries were “eager” to make a deal. “I’m telling you, these countries are calling us, licking me,” he said.
But Beijing has shown no sign of backing down. China has vowed to fight the trade war “to the end” and retaliate to protect its interests. China’s 34 percent tariff on American goods will take effect from Thursday. The US president believes his policies will revive America’s lost manufacturing base by forcing companies to relocate to the United States.
But many trade experts and economists question how quickly – if ever – this could happen, warning of high inflation as tariffs push up prices. On Tuesday, Trump said the United States was earning “about two billion dollars a day” in taxes.
China ‘wants to make a deal
He initially announced an additional 34 percent tariff on Chinese goods. But after China imposed its own tariffs of the same amount on American products, Trump added another 50 percent tariff. Counting the existing tariffs imposed in February and March, this would bring the cumulative tariff increase for Chinese goods to 104 percent during Trump’s second term.
Trump has insisted that the ball is in China’s court, saying Beijing “wants to make a deal badly, but doesn’t know how to start it.” Late Tuesday, Trump also said the United States would announce major tariffs on pharmaceuticals “very soon.” Separately, Canada said its tariffs on some US auto imports would take effect on Wednesday.
China ‘confident’
After trillions of dollars of value were wiped out of global stock markets in recent days, Asian markets reopened on Wednesday, with Hong Kong down more than three percent and Japan’s Nikkei down 2.7 percent. Foreign exchange markets have also seen a decline. The South Korean won fell to its lowest level against the dollar since 2009 this week.
China’s offshore yuan also fell to a record low against the U.S. dollar on Wednesday as Beijing’s central bank moved to weaken the yuan, marking the fifth straight day of decline, according to Bloomberg. Oil prices have fallen. The West Texas Intermediate closed below 460 for the first time since April 2021.
The European Union (EU) has sought to ease tensions, with the group’s head, Ursula von der Leyen, warning against escalating the trade conflict in talks with Chinese Premier Li Keqiang. He stressed the stability of the global economy as well as the “need to prevent further acceleration,” the EU statement said.
The Chinese premier told von der Leyen that he had “full confidence” in maintaining sustainable and healthy economic development, adding that his country could “weather the storm.” The EU could release its response to the new 20 percent tariffs next week. Trump has been harshly critical of the EU’s customs system.
The EU plans to impose tariffs of up to 25 percent on American goods ranging from soybeans to motorcycles in retaliation for US steel and aluminum tariffs imposed last month, according to documents seen by AFP.
Customized deals
Wall Street’s major indexes closed lower on Tuesday. The broad-based S&P 500 fell 1.6 percent. In a public sign of friction over tariffs, Trump’s top aide Elon Musk described senior White House trade adviser Peter Navarro as “dumber than a bag of bricks.”
Musk was angered when Navarro, who had signaled his opposition to Trump’s trade policies, described his Tesla company as a “car assembler” that wanted cheap foreign parts.
