China Strikes Back
China has raised its import taxes on U.S. goods to 125% as a response to U.S. President Donald Trump’s decision to increase tariffs on Chinese products to 145%. This move came after Trump paused tariffs on goods from many other countries for 90 days. China called Trump’s tariff strategy “a joke” and said the high U.S. taxes break international trade rules and are unfair.
The new taxes make it very hard for goods to be traded between the U.S. and China. Experts say that tariffs above 35% wipe out profits for Chinese exporters and make American products too expensive in China. China has warned that if Trump raises tariffs even more, it won’t keep matching the increases, as it would no longer matter economically. However, China hinted it might use other ways to fight back if needed.
On Thursday, China banned Hollywood movie imports and issued travel warnings for U.S. visits, including for students going to Ohio, as retaliation. Analysts from UBS noted that China’s decision to stop matching tariff hikes shows that trade between the two countries is mostly over, with both now taxing 100% of each other’s goods.
China is also trying to build alliances. President Xi Jinping met with Spain’s leader and urged the European Union to oppose U.S. actions. Next week, Xi will visit Vietnam, Malaysia, and Cambodia to strengthen ties, offering better access to markets like agriculture. China’s Commerce Minister has been talking with leaders from the EU, Malaysia, Saudi Arabia, and South Africa to gain support.
China and the EU have agreed to restart trade talks, which could end a long dispute and focus China’s trade issues solely on the U.S. China says it’s open to negotiating with the U.S. but won’t respond to threats.
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