Shipping containers sit at a port in Tianjin, China February 8, 2025. REUTERS/Florence Lo/File photo Purchase Licensing Rights
China raises duties on US goods to 125%, calls Trump tariff hikes a 'joke'
BEIJING, April 11 (Reuters) - China hiked its levies on imports of U.S. goods
to 125% on Friday, hitting back at Donald Trump's decision to single
out the world's No.2 economy for higher duties, while dismissing the
U.S. president's tariff strategy as "a joke."
Investors had been waiting to see how Beijing would respond to Trump's move on Wednesday to effectively raise tariffs on Chinese goods to 145%
while announcing a 90-day pause on duties on dozens of other countries'
goods. The yuan slipped to levels last seen during the global financial
crisis on Thursday but rebounded slightly on Friday.
"The
U.S. side's imposition of excessively high tariffs on China seriously
violates international economic and trade rules, runs counter to basic
economic principles and common sense, and is simply an act of unilateral
bullying and coercion," China's Finance Ministry said in a statement.
The tit-for-tat increases stand to make goods trade between the world's two largest economies impossible, analysts say,
with import duties above around 35% wiping out Chinese exporters'
profit margins and making American offerings in China similarly overly
expensive.
Beijing
indicated on Friday that this would be the last time it matched the
U.S., in the event that Trump takes his tariffs any higher.
"Even
if the U.S. continues to impose even higher tariffs, it would no longer
have any economic significance and would go down as a joke in the
history of world economics," the Finance Ministry's statement added.
"If
the U.S. continues to play a numbers game with tariffs, China will not
respond," it added. However it left the door open for Beijing to turn to
other types of retaliation, reiterating that China would fight the U.S.
to the end.
On Thursday, Beijing said it would immediately restrict imports of Hollywood films in response to Trump's tariff increases. Earlier this week, China focused its sights on U.S. services exports,
issuing a travel advisory for citizens visiting the U.S. and an alert
for students considering studying in the U.S. state of Ohio.
UBS
analysts said in a note that China's declaration that it would not
retaliate in kind against any further tariff increases was "an
acknowledgement that trade between the two countries has essentially
been completely severed".
Both
sides now tax 100% of each other's goods, after China increased the
percentage of two-way trade it subjects to taxes from 63% on April 9,
following the U.S. broadening the scope of its duties from 67% in
February.
Average
U.S. tariffs on Chinese exports now stand at 135%, according to the
Peterson Institute for International Economics, more than 40 times
higher than before the first U.S.-China trade war kicked off in 2018.
SEEKING TO BUILD ALLIANCES
Beijing is seeking to rally trading partners to its cause.
In his first public comments on the tariffs, President Xi Jinping told Spanish Prime Minister Pedro Sanchez
during a meeting in Beijing that China and the European Union should
"fulfill their international responsibilities... and jointly oppose
unilateral acts of bullying", China's state news agency Xinhua reported.
Xi begins a three-nation tour of Southeast Asia
next week, aiming to consolidate ties with some of China's closest
neighbours as trade tension escalates with the United States.
Eric
Orlander, co-founder of the China-Global South Project, said improved
market access in areas like agriculture would likely be on the table
when Xi meets his Vietnamese, Malaysian and Cambodian counterparts
rather than "big free trade deals".
"China's best offer to Vietnam is stability. Don't underestimate how important that is at a time like this," Orlander added.
Chinese
Commerce Minister Wang Wentao has sought to get ahead of U.S.
negotiators, holding video calls this week with his counterparts from
the EU and Malaysia, which is chairing ASEAN this year, as well as Saudi
Arabia and South Africa, by way of reaching out to Gulf countries and
the Group of 20 and BRICS nations.
Beijing and Brussels
agreed on Thursday to restart talks on trade relief and to immediately
carry out negotiations on electric vehicle price commitments, according
to a readout of his meeting with European Commissioner for Trade and
Economic Security Maros Sefcovic, meaning a truce to a longstanding spat
could be forthcoming.
A rapprochement with Europe would take China's trade war with the West back to a single front -- the U.S.
"China
remains open to negotiations with the U.S., but threatening and
pressuring are not the right way to engage with China," the country's
Commerce Ministry said in a separate statement.
Reporting by Joe Cash, Yukun Zhang, Bu Shi, Qiaoyi Li, Xiuhao Chen and Liz Lee Editing by Sharon Singleton and Frances Kerry