Trump Tariffs Live Updates: China Hit With 104% Tariffs as Stocks Slump

On Wednesday, the Trump administration carried out its threat to increase tariffs on Chinese exports by an additional 50 percent unless China rescinded its own retaliatory tariffs on U.S. goods from last week. The minimum tax on Chinese imports is now a staggering 104 percent.

With China’s top leader, Xi Jinping, and Mr. Trump locked in a game of chicken — each unwilling to risk looking weak by making a concession — the trade fight could spiral out of control, inflaming tensions over other areas of competition like technology and the fate of Taiwan, the self-governing island claimed by Beijing.

Mr. Trump’s bare-knuckle tactics make him a singular force in U.S. politics. But in Mr. Xi, he faces an opponent who survived the turmoil of China’s late-20th-century political purges, and who views the United States’ competitive tactics as ultimately aimed at subverting the ruling Communist Party’s legitimacy.

“Trump has never gone into a back-alley brawl where the other side is willing to brawl and use the same kind of tactics as him,” said Scott Kennedy, a senior adviser at the Center for Strategic and International Studies, a Washington think tank. “For China, this is about their sovereignty. This is about the Communist Party’s hold on power. For Trump, it might just be a political campaign.”

China’s economy, which was already in a vulnerable state because of a property crisis, now faces the specter of a global recession and a devastating slowdown in trade, its defining industry and main driver of growth. In a sign of Beijing’s growing unease, Chinese censors appeared to be blocking social media searches of hashtags that referred to the number 104, as in the size of the American tariffs.

“This is a huge shock to the China-U.S. economic relationship, like an earthquake,” Wu Xinbo, the dean of the Institute of International Studies at Fudan University in Shanghai, said of the tariffs imposed on Wednesday. “It remains to be seen if this is temporary turmoil or a long-term unavoidable trend.”

To be sure, a U.S.-China decoupling is still far from becoming reality. Chinese and American companies like TikTok and Starbucks are both still entrenched in each other’s countries. And Chinese banks remain hitched to the U.S. dollar-dominated financial system.

China and the United States are still at the brinkmanship stage, Mr. Kennedy said, each trying to force the other to offer a deal on bended knee. But the spat could become more dangerous if the Trump administration goes after Chinese financial institutions — for instance, by rescinding the licenses of Chinese banks in the United States or booting them off the international payments system Swift.

In pushing back against Mr. Trump’s moves, Beijing has cast itself as a victim of unfair American trade practices and protectionism. The irony is that China has done the same, if not worse, over the decades by limiting foreign investment and subsidizing Chinese firms.

Mr. Xi himself has made no direct comment about the latest U.S. tariffs. On Wednesday afternoon, though, shortly after they took effect, Chinese state media announced that he and the other six members of the Politburo Standing Committee, the apex of power in China, as well as other top officials, had met to discuss how to bolster ties with China’s neighbors and “strengthen industrial and supply chain cooperation.”

A spokesman for China’s Foreign Ministry, Lin Jian, did address the new tariffs, saying on Wednesday that China would “never accept such arrogant and bullying behavior” and would “definitely retaliate.”

Any fracture between the Chinese and American economies will be felt across the world. Business was the bedrock of the bilateral relationship for nearly five decades. Without it, their engagement on other global issues, like security, climate change and future pandemics and financial crises, would likely stall.

China has tried to downplay its vulnerability to the economic chaos unleashed by the Trump administration. It says it has reduced its reliance on U.S. markets for its exports and that its economy is getting more self-sufficient, especially when it comes to developing homegrown technologies.

But that papers over serious problems in the Chinese economy, which has been largely stagnant because of a collapse in the property market. Moreover, Mr. Trump’s assault on the global trading system, which includes targeting countries like Vietnam where Chinese companies had opened factories to circumvent earlier U.S. tariffs, strikes at the core of one of China’s only current economic bright spots.

The fallout from the trade disruption will hurt the United States, which relies on China for all sorts of manufactured goods, but will do more damage to China, said Wang Yuesheng, the director of the Institute of International Economics at Peking University.

“The impact on China is mainly that Chinese products have nowhere to go,” Mr. Wang said. That will ravage export-oriented companies making things like furniture, clothing, toys and home appliances along China’s eastern seaboard, which largely exist to serve American consumers.

“These companies will be hit very hard,” Mr. Wang said.

The threat to China’s exports compounds the challenging task of bringing back foreign investment, which has undergone an exodus since the Covid pandemic and the introduction of strict national security laws that made doing business in China increasingly difficult.

Mr. Xi has tried to woo foreign investors back, hosting a group of executives from overseas last month in Beijing. In a speech, he said China’s development was owed not only to the leadership of the Communist Party, but to the “support and help of the international community, including the contributions made by foreign-funded enterprises in China.”

Beijing’s strategy now is to push back at the United States and hope that Mr. Trump succumbs to domestic pressure to reverse course, said Evan Medeiros, a professor of Asian studies at Georgetown University who served as an Asia adviser to President Barack Obama.

“They know that if they give in to pressure they will get more pressure,” he said. “They will resist it with the belief that China can withstand more pain than they can.”

Until then, China’s leaders appear to be girding the country for a protracted fight. One sign: Influential bloggers have been allowed to weigh in on the crisis and suggest ways to retaliate against the United States.

One of them, Ren Yi, a Harvard-educated Chinese blogger who goes by the pen name “Chairman Rabbit,” listed six potential countermeasures, including restrictions in China on U.S. service businesses like law firms and consultancy companies; cutting imports of American poultry and soybeans; and ending cooperation with Washington on reducing the flow of fentanyl into the United States.

“The trade war,” he wrote, “is not simply an economic friction but a ‘war without smoke.’ This must be understood from that perspective.”

Vivian Wang contributed reporting from Beijing.