Trump administration smacks China with huge new tariffs
On Wednesday, US President Donald Trump unveiled his “Liberation Day” tariffs aimed at rebalancing US trade with the rest of the world.
The details:
- All US trade partners are subject to a baseline tariff of 10%, effective April 5.
- Many others face additional “reciprocal” tariffs – reportedly calculated by dividing a given country’s trade surplus by the value of its exports to the US – effective April 9.
China came in for a 24% reciprocal tariff in addition to the 10% baseline tariff.
Quick math: Added to the two sets of 10% tariffs announced in February and March, the Trump administration has now slapped Chinese exports to the US with 54% tariffs.
- That’s a smidge below the 60% tariff rate that Trump pledged to impose during his election campaign.
China is biding its time: The Ministry of Commerce blasted the tariffs, but hasn’t announced specific countermeasures.
Get smart: Trump has telegraphed “Liberation Day” for months, giving China plenty of time to prepare a response. We expect Beijing’s retaliation to follow the multipronged approach of recent months, including:
- Targeted tariffs hitting politically sensitive sectors, like agriculture
- Blacklisting or anti-trust probes of strategically important US companies
- Critical mineral export controls
Oh, the inanity: The Trump tariffs are an epochal event for global trade, and it will be a while before the implications are fully realized.
- But one thing is clear – China’s struggling exporters now face an even bleaker outlook.