China and the European Union (EU) announced new trade barriers on US goods on Wednesday in response to steep duties imposed by US President Donald Trump, escalating a global trade war that has hammered markets and raised the likelihood of recession.
China announced a tariff hike on US imports to 84 per cent from 34 per cent, shortly after Trump’s punitive 104pc tariffs on Chinese imports kicked in today as a standoff between the world’s two largest economies showed no signs of resolution.
The EU said it would impose 25 per cent tariffs on a range of US imports in a first round of countermeasures. The 27-member bloc faces US tariffs of 20 pc on most products and higher duties on autos and steel.
Trump’s latest salvo of tariffs came into effect on dozens of trading partners earlier Wednesday, including punishing duties of 104 per cent on imports of Chinese products.
Beijing originally planned to respond with a 34 per cent tariff on imports of US products from 1601 GMT on Wednesday, but the finance ministry said it would now raise the toll to 84 per cent after Trump dramatically hiked his own duties on imports from China.
“The tariff escalation against China by the United States simply piles mistakes on top of mistakes (and) severely infringes on China’s legitimate rights and interests,” the ministry said. Washington’s moves “severely damage the multilateral rules-based trade system,” it added.
In a separate statement, Beijing’s commerce ministry said it would blacklist six American artificial intelligence firms, including Shield AI and Sierra Nevada Corp.
Trump did not immediately react to the Chinese counterattack but he called on companies to start relocating to the United States to avoid tariffs.
“This is a GREAT time to move your COMPANY into the United States of America, like Apple, and so many others, in record numbers, are doing,” the US president said on his Truth Social platform.
He urged: “DON’T WAIT, DO IT NOW!”
Trump believes his policy will revive America’s lost manufacturing base by forcing companies to relocate to the United States. But many business experts and economists question how quickly — if ever — this can take place and warn it could reignite inflation.
Meanwhile, the EU will impose a 25pc duty on corn (maize) from April 15 in response to US steel and aluminium tariffs. US soybeans, which the EU imports in much bigger volumes than corn, will be subject to tariffs from December 1.
European countries mainly use corn to feed cattle, poultry and pigs. The retaliatory measures will price US corn out of European markets where buyers have scooped up abundant and cheap US supplies this season.
US Treasury Secretary Scott Bessent, in an interview with Fox Business Network, said China’s new tariffs were unfortunate.
“They have the most imbalanced economy in the history of the modern world, and I can tell you that this escalation is a loser for them,” he said.
This week has already brought crisis-era volatility to markets, wiping trillions of dollars off the value of stocks and hammering commodities and emerging markets.
The escalating trade war has wiped off trillions of dollars in market value since last week as investors fear that the trade war will spark a recession.
After some respite on Tuesday, stock markets were in panic mode again, with Tokyo’s Nikkei index closing almost four percent lower on Wednesday.
Paris and Frankfurt sank four per cent in afternoon trading while London was down 3.5 per cent. US equities were expected to open with more losses.
The Bank of England warned of risks to “UK financial stability” from increased geopolitical tensions, including the fallout from the US tariffs.
Italy is preparing to cut its 2025 growth forecast in half, to 0.6 per cent from 1.2, a government source said, while Spain is also set to downgrade its outlook.
Central banks in India and New Zealand cut interest rates to boost their economies in the face of tariffs.
Oil prices fell below $60 a barrel, their lowest level in four years.
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