China strikes back with 84 percent tariffs amid escalating trade war

Beijing/Brussels/Washington. China will impose 84 percent tariffs on US goods from Thursday, up from the 34 percent previously announced, its finance ministry said on Wednesday, firing the latest salvo in a global trade war sparked by US President Donald Trump.

Trump's "reciprocal" tariffs on dozens of countries took effect earlier on Wednesday, including massive 104 percent duties on Chinese goods. The European Union is also preparing its own retaliatory measures for later on Wednesday.

Trump's punishing tariffs - which he says aim to end US trade deficits with many countries - have upended a global trading order in place for decades, raising fears of recession and wiping trillions of dollars off the market value of major firms.

Global markets took a pummelling on Wednesday as Trump's eye-watering 104 percent tariffs on China came into effect, and a savage selloff in US bonds sparked fears that foreign funds were fleeing US assets.

US Treasury Secretary Scott Bessent, in an interview with Fox Business Network, said China's new tariffs were unfortunate.

"They have the most imbalanced economy in the history of the modern world, and I can tell you that this escalation is a loser for them," he said.

This week has already brought crisis-era volatility to markets, wiping trillions of dollars off the value of stocks and hammering commodities and emerging markets.

Shares of big US banks fell pre-market, extending tariffs-induced losses after China announced its 84% tariffs on U.S. goods. Oil prices extended their four-year lows.

"The US and China are stuck in an unprecedented, and expensive, game of chicken, and it seems that both sides are unwilling to back down," said Ting Lu, chief China economist at Nomura.

Trump had nearly doubled duties on Chinese imports, which had been set at 54% last week, in response to previous counter-tariffs from Beijing.

The White House had no immediate comment on China’s latest retaliatory move.

Earlier on Wednesday, China called its trade surplus with the United States an inevitability and warned it had the "determination and means" to continue the fight if Trump kept hitting Chinese goods.

China's currency has faced heavy downward pressure, with the offshore yuan at record lows due to the tariffs. But sources told Reuters the central bank has asked major state-owned banks to reduce U.S. dollar purchases and would not allow sharp yuan declines.

Meanwhile, China told the World Trade Organization that the U.S. tariffs threatened to further destabilise global trade.

"The situation has dangerously escalated. ...As one of the affected members, China expresses grave concern and firm opposition to this reckless move," China said in a statement to the Geneva-based WTO on Wednesday that was sent to Reuters by the Chinese mission to the WTO.

Market rout

Since Trump unveiled his tariffs on April 2, the S&P 500 (.SPX), opens new tab has suffered its deepest loss since the benchmark's creation in the 1950s. It is now nearing a bear market, defined as 20% below its most recent high.

US Treasuries were also caught up in the market turmoil and extended heavy losses on Wednesday in a sign investors are dumping even their safest assets, and the dollar, a traditional safe haven, was weaker against other major currencies.

European shares fell and US stock futures pointed to more pain ahead, following a grim session for most of Asia.

Trump has shrugged off the market rout and offered investors mixed signals about whether the tariffs will remain in the long term, describing them as "permanent" but also boasting that they are pressuring other leaders to ask for negotiations.

European Union countries were expected to approve the bloc's first countermeasures against Trump's tariff barrage on Wednesday, joining China and Canada in pushing back.

The European Commission, which coordinates EU trade policy, has proposed extra duties, mostly of 25%, on U.S. imports ranging from motorcycles, poultry, fruit, wood, and clothing to dental floss, according to a document seen by Reuters.

They are to enter into force in stages.