China hits back hard in global trade war with tariffs on US goods

(Reuters)

BEIJING/WASHINGTON/BRUSSELS, April 4 – China announced additional tariffs of 34% on U.S. goods on Friday, the most serious escalation in a trade war with President Donald Trump that has fed fears of a recession and triggered a global stock market rout.

In the standoff between the world’s top two economies, Beijing also announced controls on exports of some rare earths and filed a complaint at the World Trade Organisation.

It added 11 entities to the “unreliable entity” list, which allows Beijing to take punitive actions against foreign entities, including firms linked to arms sales to democratically governed Taiwan, which China claims as part of its territory.

Nations from Canada to China have readied retaliation in a mounting trade war after Trump raised U.S. tariff barriers to their highest level in more than a century this week, leading to a plunge in world financial markets.

Investment bank JP Morgan said it now sees a 60% chance of the global economy entering recession by year end, up from 40% previously.

U.S. stock futures fell sharply on Friday, signaling more losses on Wall Street, after China retaliated with fresh tariffs a day after the Trump administration’s sweeping levies knocked off $2.4 trillion from U.S. equities.

“China comes out swinging with an aggressive response to Trump’s tariffs,” said Stephane Ekolo, Market & Equity Strategist, Tradition, London.

“This is significant and is unlikely to be over, hence the negative market reactions. Investors are afraid of a ‘tit for tat’ trade war situation.”

Shares of Big Tech stocks fell in premarket trading, with companies such as Apple (AAPL.O), opens new tab and Nvidia (NVDA.O), opens new tab having big exposure to China and Taiwan for manufacturing their products.

In Japan, one of United States’ top trading partners, Prime Minister Shigeru Ishiba said the tariffs had created a “national crisis” as a plunge in banking shares on Friday set Tokyo’s stock market on course for its worst week in years.

U.S. Secretary of State Marco Rubio on Friday disputed any economic crash, telling reporters that markets were reacting to the change and would adjust.

“Their economies are not crashing. Their markets are reacting to a dramatic change in the global order in terms of trade,” he said at a press conference in Brussels. “The markets will adjust.”