China strikes back against Trump's tariffs with 34% levies on US products

The world trade war is now a fact. China has officially announced that it will impose tariffs of 34% on U.S. products that want to cross its borders. This is the same percentage applied by Donald Trump to Chinese goods that intend to enter the U.S. market since April 10.

A response beyond tariffs

But the Asian giant did not limit itself to imposing levies on trade. In addition, the Chinese authorities added two other measures to punish U.S. producers: it will limit the activity of 16 entities in the country by including them on the export control list and restrict the sale of rare earths.

Among the items on which it will impose export controls are gadolinium, which is used for MRI scans, and itrium, used in consumer electronics products.

Panic in the stock markets after Beijing's response

The markets reacted imminently to this escalation of tensions between the world's two leading economic powers. Following the announcement, the London stock market fell by 3.48%, Frankfurt by 4.46%, Paris by 3.83%, Milan by 7.18% and Madrid by 5.66%, in the worst performance since the pandemic.

In Asia, even before the Chinese government's response, investors continued to sell their stocks en masse following Trump's announcements. Before China announced its retaliatory measures, Tokyo closed down 2.75%. Seoul gave up 0.86% and Sydney, 2.44%. Chinese stock exchanges were closed due to the public holiday.

In addition to the trillion dollar losses, the Nasdaq (-5.97%) and S&P 500 (-4.84%) indexes fell the day before.

China's announcement sends oil prices down 5%

Oil prices plunged more than 5% following the Chinese counterattack in response to Donald Trump's tariffs. Soon after the announcement by Chinese authorities, the price of North Sea Brent for June delivery fell 4.99% to $66.64. The barrel for May delivery of West Texas Intermediate (WTI), the U.S. benchmark, sank 5.23% to $63.45 a barrel.