China has sent a stern message to the United States. It condemned threats to escalate tariffs, and pledged to retaliate should Washington follow through.
This uncompromising position intensifies the ongoing war of trade between the two largest economies in the world, dimming the hopes for a quick resolution.
The Chinese Ministry of Commerce issued a strong statement on Tuesday, stating that the US threat to escalate tariffs against China was a mistake on a top of a previous mistake. This shows the extortionate nature of America.
If the US insists that it is the only way, China will fight until the end.
The Chinese response came only hours after US President Donald Trump threatened to slap an additional 50% import tax on China unless the country removed its retaliatory levies against his previous levies.
This blunt response suggests that China intends to resist Trump’s pressure, raising the possibility of a long and damaging conflict.
“The rhetoric coming from China is strong. Investors may need to be prepared for trade decoupling if Trump does not back down, said Michelle Lam, greater China economic analyst at Societe Generale SA.
Yuan weakens, stocks rebound: market volatility continues
China’s onshore currency, the yuan, fell to its lowest level since 2023, after the Chinese central banks eased their control over the currency. Meanwhile, a measure of Chinese stocks listed on Hong Kong rose up to 3.7%, after having its worst day since financial crisis on Monday.
This volatility highlights the uncertainty surrounding the trade disputes and their potential impact on the Chinese economic system.
Doubling down: Trump’s cumulative tariff impact
According to a White House official, Trump’s latest threats would be added to the 34% “reciprocal duty” that will kick in on April 9 as well as the 20% levy introduced earlier this year.
This would effectively double the import price for any goods shipped from China to the US. This move would have significant repercussions on both economies.
In its statement, the Chinese Ministry of Commerce called for dialogue in order to resolve disputes. However, Trump said on Monday that “all talks” with China about a possible meeting would be terminated if Beijing didn’t take any action. He did not specify what Beijing should do.
The escalation in tensions dims the prospects of any imminent leadership call.
Trump hasn’t talked to Chinese President Xi Jinping after returning to the White House. This is the longest time between a US President and his Chinese counterpart since their inauguration, highlighting the strained relations between the two countries.
The Communist Party’s official paper published an editorial earlier in the week declaring that Beijing no longer “clings to illusions” about striking a deal.
Xi has pledged to boost domestic consumption. He is aware that tariffs will hurt exports – a sector which accounted for a third in China’s growth last year.
Ding Shuang is the chief economist at Standard Chartered for Greater China & North Asia. He predicts that China would respond to any new US Tariffs with similar measures. He argues that any new levies by the US will only have a limited effect on the Asian nation.
He said that the marginal effect of increasing tariffs from the current level of around 65% would shrink.
Most Chinese exports have already been affected. Tariffs will not work for goods that aren’t price sensitive.
China defends itself against US ‘hegemony
China’s Embassy in Washington responded to the latest US action by asserting that US threats and pressuring China are “not the correct way to engage with China” and that China will defend its own interests.
“The US hegemonic movement in the name’reciprocity,’ serves its selfish interest at the expense other countries’ legitimate concerns and puts ‘America First’ over international laws,” embassy spokesperson Liu Pengyu stated, signaling China’s determination to protect economic sovereignty.
This post China digs into, vows to “fight to the finish” if US imposes a new tariff, escalating Trade War may be modified as developments unfold
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