In a counterintuitive step, China has raised its own tariffs on American goods by much more. In reality, that new rate has ballooned to 84%, up from just 34% before. This decision comes on the heels of the U.S. imposing a record-breaking 104% duty on Chinese goods exported to the U.S. Tariff increases These new tariffs are scheduled to go into effect on April 10. They act as an extra retaliatory tool in the escalating trade war between the two countries.
Yet amidst this intensifying standoff, China has offered no genuine willingness to negotiate an outcome. The Chinese government repeated its claim that bilateral trade is in balance. This allegation is supported by a new white paper published by the Chinese ministry of commerce. This type of economic activity, the document argues, should be considered “generally in balance,” which they say contradicts the narrative of a deepening trade deficit.
The trade in services quickly became a huge point of contention. As the chart above shows, in 2023, China faced a mind-boggling $26.57 billion deficit with the U.S. This figure does not capture daunting complexities in the bilateral trade relationship, perils in the nature of services which insurance, banking, and accounting represent.
Worse still, the U.S. has done exactly the opposite by introducing bad faith legislation. This legislation would effectively prohibit TikTok unless its Chinese parent company divests the app. This unexpected move breaks all of the transparency commitments spelled out in America’s phase 1 trade deal with China. That agreement was concluded in the early days of former President Donald Trump’s first term. The deal featured guarantees that neither side would coerce the other into sharing technology with its citizens.
In reaction to these new developments, Lin Jian, a spokesperson with China’s Ministry of Foreign Affairs took to Twitter. He implored the U.S. to take an attitude of equality, respect and mutual benefit if it truly seeks to solve problems through dialogue and negotiation.
Understandably the Chinese commerce ministry expressed this sentiment in the strongest terms. They claimed, “History and facts have repeatedly demonstrated that the United States raising tariffs will not resolve its own issues.” In fact, they cautioned that further rounds of tariffs could introduce instability to global financial markets. This would further increase inflationary pressures in the U.S. while undermining the American industrial base, increasing the chance of an economic recession.
China’s response has been firm. They have vowed to “fight to the end” against Trump’s tariffs. The Ministry of Commerce emphasized that if the U.S. persists with escalating economic restrictions, China possesses “the firm will and abundant means to take necessary countermeasures.”
