The trade war between the U.S. and China is intensifying as China enacts an additional 84% tariff in response to U.S. President Donald Trump's "tariff bomb" against China.
China began imposing an additional 84% tariff on U.S. imports starting at 12:01 p.m. (local time) on the 10th. However, additional tariffs will not apply to goods that were shipped before this time and imported before midnight on the 14th of the following month.
The Trump administration has decided to postpone reciprocal tariffs for 90 days for countries other than China, implementing only a basic tariff of 10%, which is leading to a "chicken game" in U.S.-China trade tensions. In contrast, it continues to apply high pressure on China by increasing tariffs up to 125%.
China has been responding proportionately to President Trump's tariff measures with a "an eye for an eye, a tooth for a tooth" approach. When Trump announced a 34% reciprocal tariff, China matched it with a 34% tariff, and after the U.S. added an additional 50%, China raised its total to 84%.
On the 9th, shortly after the implementation of reciprocal tariffs, President Trump announced plans to raise tariffs on China to 125%, while stating that only a 10% basic tariff would apply to other countries for 90 days. However, he indicated that he "does not think more needs to be done" regarding the possibility of further increases to the tariffs on China.
As the trade war front narrows down to a confrontation between the U.S. and China, the conflict between the world's two largest economies is escalating. The World Trade Organization (WTO) has predicted that if U.S.-China trade tensions worsen, trade in goods between the two countries could decrease by up to 80%.
China is also imposing sanctions on U.S. companies along with tariff increases. Since the inauguration of President Trump, China has sanctioned about 60 U.S. companies, and this time has added 18 U.S. defense companies to the list of sanctions. It is also increasing its response level by implementing precision targeting measures such as export controls on rare earths.
The People's Daily, the official newspaper of the Chinese Communist Party, noted in an editorial on the 7th that "the U.S.'s indiscriminate tariffs may shock China, but they are by no means fatal," emphasizing the will to resist. In another editorial on the 10th, it stated, "We will continue to take strong countermeasures against the U.S.'s economic harassment."
China has also hinted at preparing "six major countermeasures." The Chinese social media platform Niu Tan Qin reported on the 8th that China is considering tariff increases on U.S. agricultural products, halting livestock imports, and conducting investigations on U.S. corporations.
Domestically, it is also pursuing a diplomatic strategy to strengthen industrial and supply chain cooperation with neighboring countries while contemplating additional economic stimulus measures. This is interpreted as being aimed at a prolonged conflict.
This trade war is also affecting human exchanges. China's Ministry of Culture and Tourism has advised its citizens to avoid travel to the U.S., while the Ministry of Education has warned that visas for some students studying in the U.S. have been canceled without notice, calling for a reevaluation of studying in the U.S.
Zhang Zhiwei, chief economist at Pinpoint Asset Management, told Bloomberg News that "China has sent a strong signal that it will maintain its trade policy direction despite the U.S. tariff increases," and added, "This trade dispute will not end quickly or easily."
Some speculate that as the impact on both economies becomes more pronounced, especially if consumer prices in the U.S. rise or employment slows, China may look for opportunities to negotiate.