China announced sweeping 34% tariffs on US goods on Friday, marking a dramatic escalation in the trade war with President Donald Trump. Unlike its measured response during Trump’s first term, Beijing has now adopted an unyielding stance with a comprehensive package of retaliatory measures. Beyond tariffs, China added 11 US entities to its “unreliable entity” list and announced controls on exports of some rare earth minerals, resources critical for many high-tech industries.
Global Markets Plummet as Recession Fears Mount
Wall Street opened sharply lower following China’s retaliation, after Trump’s initial tariff announcement had already wiped $2.4 trillion from US equities. Investment bank JP Morgan has increased its forecast for a global recession by year-end from 40% to 60%. In Japan, Prime Minister Shigeru Ishiba described the situation as a “national crisis” as banking shares plunged, while European shares also tumbled to their biggest weekly losses in years.
Trump Doubles Down Despite Market Turbulence
Trump has shown no signs of backing down despite the market turmoil. “My policies will never change. This is a great time to get rich, richer than ever before!!!” he posted on social media. After Beijing’s retaliation, he added: “China played it wrong, they panicked – the one thing they cannot afford to do!” The president did suggest potential flexibility on providing tariff relief in exchange for Beijing’s approval of TikTok’s sale, though he didn’t confirm plans for direct talks with Chinese President Xi Jinping.
China’s Strategy Shift Signals New Approach
China’s swift and comprehensive retaliation marks a significant shift from its previous strategy of phased concessions. “Beijing likely sees little room for meaningful talks or suspects Washington has no real interest in negotiating,” said John Gong, a professor at the University of International Business and Economics. Zhou Xiaoming, former deputy representative of China’s Permanent Mission to the UN, described it as “an epic response,” suggesting China may have abandoned illusions about the Trump administration.
Global Responses and Economic Impact
Other countries hit by Trump’s tariffs, including Canada, have also prepared retaliatory measures. The European Union remains divided, with Trade Commissioner Maros Sefcovic saying, “We will not shoot from the hip – we want to give negotiations every chance to succeed.” The escalating tariffs could significantly impact consumer prices, with analysts projecting items like high-end iPhones could cost nearly $2,300 if companies pass tariff costs to consumers.
Trump’s administration contends the tariffs will create manufacturing jobs and open export markets, though officials acknowledge results will take time. Meanwhile, China’s trade dependence on America has been declining as it focuses more on other markets and domestic growth. Despite the tensions, the Chinese Commerce Ministry maintains it is still committed to dialogue, though resolution appears increasingly difficult.