Trump imposes 104% tariffs on Chinese goods in escalating global trade war

US-China trade war (Photo: WBS/Phaata)

President Donald Trump is set to formally launch a trade war with the rest of the world on Wednesday, as he moves to impose a series of tariffs on America's biggest trading partners, despite concerns about widespread economic damage and calls for a reconsideration.

The US president has insisted that "many" countries are working to reach agreements with Washington, as his administration prepares to impose steep tariffs on goods from dozens of markets starting Wednesday.

However, Beijing has vowed to “fight to the end” after Mr Trump threatened to impose an additional 50% tariff on Chinese goods if Beijing goes ahead with plans to retaliate against the first round of 34% tariffs he announced. This would bring the total tariff on Chinese goods to 104%, including the 20% already in place.

The White House confirmed that the higher tariffs on Chinese goods will officially take effect on Wednesday. “President Trump has a spine of steel and he will not break,” said Press Secretary Karoline Leavitt. “And America will not break under his leadership.”

Billionaire and Trump adviser Elon Musk has reportedly urged the president to back off on the tariffs, while the New Civil Liberties Alliance – funded by groups linked to conservative businessmen Leonard Leo and Charles Koch – has filed a lawsuit against the tariffs, which it says are “illegal”.

The new tariffs are higher than the 10% flat rate imposed on all global imports into the US last week, and are tailored to each country based on a formula that has been criticised by economists – dividing the goods trade deficit by twice the value of total imports.

After days of volatility since the plan was revealed last week, global markets initially recovered somewhat on Tuesday as senior US officials sought to reassure investors that the new tariffs – which include 20% on the European Union, 26% on India and 49% on Cambodia – would be temporary.

The recovery was short-lived, however. On Wall Street, the S&P 500 fell 1.6% to 4,982.77 — its first close below 5,000 in more than a year — while the Dow Jones Industrial Average fell 0.8%. The tech-heavy Nasdaq fell a sharp 2.2%.

Earlier in the day, London's FTSE 100 rose 2.7%, recovering some of the losses since Trump announced the tariffs on what his advisers have dubbed "liberation day." Tokyo's Nikkei 225 rose 6%, while Hong Kong's Hang Seng gained 1.5%.

US Treasury Secretary Scott Bessent said the new tariffs were "maximum" and expressed confidence that negotiations would result in lower tariffs.

“I think you are going to see some very large countries with large trade deficits [with the US] come forward very quickly,” he said on CNBC on Tuesday. “If they come to the table with solid proposals, I think we can end up with some good deals.”

Asked on Monday whether the tariffs were a way to get ahead of the negotiations or a long-term fix, Trump said: “Well, it can both be true,”

However, he continued to talk about the possibility of a deal with countries on Tuesday, teasing a possible deal with South Korea.

“Their top TEAM is on a plane heading to the US, and things are looking good,” Trump wrote on the Truth Social platform. “We are likewise dealing with many other countries, all of whom want to make a deal with the United States.”

“‘ONE STOP SHOPPING’ is a beautiful and efficient process!!! China also wants to make a deal, badly, but they don’t know how to get it started. We are waiting for their call. It will happen!”

Rachel Reeves, the UK chancellor, sought to allay concerns about market volatility, telling parliament she had spoken to Andrew Bailey, the governor of the Bank of England, who confirmed “markets are functioning effectively and that our banking system is resilient”.

A trade war “is in nobody’s interest,” Reeves said, confirming that the UK is seeking a new trade deal with the US. Trump has imposed a 10% tariff on British exports, in line with the baseline set over the weekend.

China has taken a very different view. In a scathing editorial, state news agency Xinhua accused the US president of “shameless blackmail.”

“It is absurd for the United States to say: ‘I can hit you any time I want, and you are not allowed to respond. Instead, you must surrender unconditionally.’ “This is not diplomacy. It is blunt coercion dressed up as policy,” the article stressed.

On social media, a video of a 1987 speech by the late US President Ronald Reagan shared by the Chinese Foreign Ministry has gone viral. In the video, Reagan criticizes the use of tariffs as a way to provoke retaliation and ultimately damage the US economy – “has a new meaning in 2025,” commented Chinese newspaper The Paper.

Bessent asserted on Tuesday that China is making a “big mistake” by retaliating: “They’re playing with a pair of twos,” he told CNBC. “What do we lose by the Chinese raising tariffs on us? We export one-fifth to them of what they export to us, so that is a losing hand for them.”

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Source: Phaata.com (According to The Guardian)

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