In an unexpected move, President Donald Trump is poised to impose a staggering 104% tariff on all imports from China, as announced by White House Press Secretary Karoline Leavitt on Tuesday. This decision follows the existing Chinese tariffs that were already in place prior to Trump's second term, escalating trade tensions further between the two nations.
Initially, China was set to face a 34% tariff increase on Wednesday as part of Trump’s "reciprocal" tariffs package. However, due to China’s failure to retract its commitment to impose retaliatory tariffs of 34% on U.S. goods by noon Tuesday, Trump decided to add an additional 50% tariff. This brings the total duties on Chinese imports to an eye-watering 84%.
In response, China’s Commerce Ministry expressed strong opposition to the additional tariffs, describing them as “a mistake upon a mistake.” The ministry further indicated its intention to escalate retaliation against U.S. exports, highlighting the potential for increased economic conflict.
Following the announcement, U.S. stock markets exhibited volatility. Initially, stocks surged on Tuesday morning, but after Leavitt's comments, major indices began to retreat. The Nasdaq and S&P 500 dipped into negative territory, while the Dow Jones remained slightly positive around 2:30 p.m. ET.
Leavitt emphasized that countries like China, which have opted to retaliate, are making a significant error. “President Trump has a spine of steel, and he will not break,” she asserted. She also noted that “The Chinese want to make a deal; they just don’t know how to do it,” although she refrained from detailing any specific terms Trump might consider to lower tariffs on China.
Earlier this year, Trump initially implemented a 10% tariff on all Chinese goods, linking it to allegations regarding the country’s involvement in illegal immigration and the influx of fentanyl into the U.S. This rate was doubled last month. Last year, China was the United States' second-largest source of imports, shipping approximately $439 billion worth of goods to the U.S., while American exports to China totaled $144 billion. The ongoing mutual tariffs pose significant risks to domestic industries and may lead to potential layoffs across various sectors.
Additionally, dozens of other countries and the European Union face a midnight deadline for new tariff rates, as outlined by Trump last week, with rates varying from 11% to 50%. Despite engaging in talks with world leaders to negotiate lower tariff rates, Leavitt conveyed that Trump shows little inclination to delay his plans. She emphasized that Trump expects these tariffs to take effect, while also instructing his trade team to pursue “tailor-made” deals with nations interested in negotiations.
As the situation develops, it remains to be seen how these tariffs will affect U.S.-China relations and the broader global economy.
