China Strikes Back with 34% Tariff on US Goods Amid Escalating Trade War
Fresh Trade War Escalation: Tariffs Raised on Both Sides
On April 4, China announced a 34% tariff on all US imports, effective April 10, in retaliation to the 34% reciprocal tariffs imposed by US President Donald Trump on April 2, dubbed “Liberation Day.” The US tariff and an earlier 20% duty bring the total effective levy on Chinese imports to 54%.
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China Tightens Grip on Rare Earths
Simultaneously, China has implemented export controls on key rare earth minerals—including samarium, dysprosium, terbium, and gadolinium—critical to electric vehicles and defense. The controls took effect April 4, aiming to protect “national security and non-proliferation goals,” according to China’s Ministry of Commerce.
Foreign Firms Face Pressure
China also added 11 foreign entities to its “unreliability list,” granting legal authority to restrict their operations in the country. This measure increases regulatory risk for foreign firms active in Chinese markets.
Market Fallout: Dow Futures Crash 1,500 Points
Financial markets responded swiftly with major index falling:
- Dow Jones futures plunged over 1,500 points, trading just above 39,000.
- DJIA closed down 3.98% to 40,545.93, from 42,225.32.
- S&P 500 fell 4.84%, closing at 5,396.52.
- Nasdaq Composite sank 5.97% to 16,550.61.
Investor sentiment sharply declined amid fears of prolonged supply chain disruptions and slowing global trade.
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Global Impact Looms Large
With rare earth supply now under threat and trade costs rising, sectors from semiconductors to defense and green energy may face production bottlenecks. The tariff war also raises the risk of slower global growth and investment pullbacks.
In conclusion, the latest round of tariff hikes and strategic export controls marks a sharp escalation in US-China trade tensions, with significant implications for global markets, supply chains, and economic stability. As both nations adopt increasingly protectionist measures, industries reliant on rare earth minerals and cross-border trade now face heightened uncertainty. The market’s sharp reaction underscores investor anxiety, signaling that without diplomatic resolution, prolonged disruptions could reverberate across key sectors and slow global economic momentum.
