How China Plans to Respond to Trump’s Threat of 50% Tariffs

Beijing:

“It’s blackmail.” This is how China condemned US President Donald Trump’s latest threat to impose an additional 50% tariff on its goods, vowing to fight the tariffs “to the end.” The American leader has given Beijing 24 hours to retract the 34% retaliatory tariff it announced on the United States last week.

If neither side backs down and Trump proceeds with his plans, the total new tariffs on Chinese goods imported into the US could rise to 104% this year, escalating a trade war that has already triggered the largest market losses since the pandemic.

“The US threat to escalate tariffs against China is a mistake on top of a mistake, which once again exposes the US’s blackmailing nature,” China’s commerce ministry stated on Tuesday.

“If the US insists on having its way, China will fight to the end.”

The ministry reiterated its desire for “dialogue” with the United States, emphasizing that “there are no winners in a trade war.”

China’s Strategy

Beijing’s defiance stems from the Chinese government’s decision to position itself as a counterforce against what it calls “unilateral bullying” by the US. Over the weekend, Beijing sent a clear message to the world that it is well-prepared to endure a trade war.

“US tariffs will have an impact (on China), but ‘the sky won’t fall,'” the ruling Chinese Communist Party stated in a commentary in its official newspaper, People’s Daily, on Sunday.

“Since the US initiated the (first) trade war in 2017—no matter how the US fights or pressures—we have continued to develop and progress, demonstrating resilience—’the more pressure we get, the stronger we become,'” the commentary added.

US-China Trade War

On Tuesday, Trump announced he would impose an additional 50% tariff on US imports from China on Wednesday if Beijing did not withdraw the 34% tariffs it imposed on US products last week.

Those Chinese tariffs were a response to the 34% “reciprocal” duties announced by Trump. The average US tariff on Chinese goods is already set to rise to 76% following Trump’s tariffs last week.

Trump’s tariffs have already had a dramatic impact on markets in recent days, with Hong Kong’s Hang Seng index plunging 13.2% on Monday—its worst day since the Asian financial crisis—before recovering some of those losses in Tuesday’s opening trade.

The moves have led economists to question whether the White House stands to gain much from further tariff hikes.

“Since China already faces a tariff rate in excess of 60%, it doesn’t matter if it goes up by 50% or 500%,” Xu Tianchen, senior economist at the Economist Intelligence Unit, told Reuters.

“What China can do is halt US farming purchases, match US tariffs, and expand its export controls across the periodic table of chemical elements,” he added.