China Imposes 84% Tariff in Response to Trump’s 104% Hike: Global Markets in Turmoil
The global trade landscape has been shaken once again as U.S. President Donald Trump escalated tensions by imposing retaliatory tariffs on imports from numerous countries starting April 2. Some of these tariffs took effect immediately, with the rest kicking in on April 9. Analysts say this move marks the full-blown start of a global trade war.
China Strikes Back with 84% Tariff
In the early hours of April 9 (Bangladesh time), reports emerged that Trump had increased tariffs on Chinese goods to a staggering 104%. In response, China raised its own tariffs on U.S. products to 84%, up from the previous 34%. China labeled the U.S. measures as “oppressive” and said their retaliatory tariffs would take effect from April 10.
Markets React Sharply
Global markets immediately felt the shock. Asian stock markets tumbled as trading began, followed by significant declines across European markets. The pan-European Stoxx 600 index dropped by 3.4%, with nearly all sectors facing downward pressure. Healthcare, mining, oil, and gas sectors were hit hardest, seeing drops of 5.3%, 3.3%, and 4.6% respectively.
Oil prices also fell, with Brent crude dropping to $60 per barrel—its lowest since February 2021. The U.S. dollar weakened as well. Analysts now fear an increased risk of a global recession.
Pharmaceutical Sector at Risk
According to NDTV, while sectors like pharmaceuticals and semiconductors were initially spared from Trump’s latest tariffs, they may not remain exempt for long. The U.S. could soon impose heavy duties on pharmaceutical imports, which would severely impact India’s drug exports. In 2023–24, 31% of India’s pharmaceutical exports—worth $8.7 billion—went to the U.S.
Trump stated at a National Republican Congressional Committee meeting that the new tariffs would encourage companies to invest in the U.S. market.
China’s Stand and White Paper
China has expressed willingness to negotiate but reiterated that the trade imbalance is a structural issue. In a newly released white paper, China stated it has always aimed for mutually beneficial trade with the U.S. and warned that the retaliatory U.S. tariffs could destabilize global trade, security, and supply chains.
Europe Readies Its Own Response
Reuters reported that European leaders are preparing their own retaliatory measures. The European Commission has proposed 25% tariffs on various U.S. products including motorcycles, chicken, fruits, timber, clothing, and dental floss. An internal document detailing these measures has reportedly been obtained by Reuters.
The European Central Bank now believes the impact of Trump’s tariffs on the Eurozone will be worse than previously estimated. Sources say the ECB will maintain liquidity to support economic stability amid this uncertainty.
Economic Concerns Grow in the U.S.
The Bank of England’s financial stability report revealed that 62% of surveyed companies fear a U.S. economic slowdown. Bankruptcy filings in the U.S. continue to rise, and with consumers cutting back on leisure spending, inflation is expected to increase due to higher import costs. U.S. exports may also suffer due to global retaliatory tariffs.
The Washington Post reported that even tourism from neighboring countries like Canada is declining, further hurting the economy. Goldman Sachs has raised its recession risk estimate from 35% to 45%.
JPMorgan and the IMF also foresee increased recession risks. JPMorgan predicts inflation may rise from the current 2.8% to 4.4% by year-end. The Atlanta Fed projects GDP contraction of 0.8% for the January–March quarter.
Gold Prices Surge
In this atmosphere of uncertainty, gold prices surged. After falling post-April 2, gold rebounded strongly, crossing $3,000 per ounce. Prices rose by $62.12, or 2.12%, according to GoldPrice.org.
Trump Remains Unfazed
Despite the chaos, Trump appeared confident. He told reporters, “To fix a problem, you need medicine—and I’ve given the medicine. Some turbulence is expected.” He added that he’s enjoying the support and calls from world leaders, suggesting he’s unfazed by the backlash.
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