China Imposes 34% Tariff on U.S. Imports, Escalating Global Trade War
Beijing: China has officially retaliated in the intensifying trade conflict with the United States, announcing a sweeping 34% tariff on all U.S. imports, marking the most significant escalation yet in the global trade war. The decision sent shockwaves through international financial markets, with Wall Street, European, and Asian stock exchanges all suffering sharp declines in response.
Following China’s announcement, Wall Street stocks tumbled, with the Dow Jones Industrial Average dropping below 39,000 points for the first time since August. The S&P 500 recorded its steepest single-day decline since the onset of the COVID-19 pandemic in 2020. European markets followed suit, with Frankfurt and London indices plunging by as much as 5%. In Asia, Japan’s Nikkei 225 fell 3.5%, and Singapore’s Straits Times Index also posted significant losses.
IMF Warns of Global Economic Crisis
Amid rising tensions, International Monetary Fund (IMF) Managing Director Kristalina Georgieva issued a stark warning, urging U.S. President Donald Trump to find a diplomatic resolution. She emphasised that the continued escalation of tariffs could push global markets toward a major economic crisis, disrupting supply chains and weakening global growth.
China Takes the Lead in Retaliation
China is now the first major global power to respond with reciprocal tariffs, positioning itself as the country that has imposed the highest countermeasures against the U.S. to date. In addition to the 34% tariff, China’s Ministry of Commerce announced it would bring a case to the World Trade Organisation’s Dispute Settlement Body, challenging the legality of the U.S. actions under international trade law.
China also introduced export restrictions on seven rare earth elements, including gadolinium and yttrium, potentially disrupting global supply chains that rely on these critical materials.
Trump Responds, Calls for Investment and Negotiations
In response to China’s move, President Trump defended his administration’s strategy, reiterating that the tariffs are intended to correct longstanding trade imbalances. He called on the U.S. Federal Reserve to lower interest rates to cushion the economic impact and insisted that the policy would ultimately attract trillions of dollars in foreign investment as companies seek to avoid tariffs by relocating production to the U.S.
Trump also signalled a willingness to engage in negotiations, stating that countries impacted by the tariffs could benefit by making trade deals with the United States. This position was cautiously welcomed by European leaders, including Ireland, who see dialogue as the only viable path to de-escalate tensions and stabilise markets.
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