Trump hikes China tariffs to 125% but lowers tax for rest of world

Following his unveiling of global trade taxes last week the US president has now ramped up Chinese tariffs further still to 125% due to "the lack of respect China has shown to the world's markets". However, everyone else will see a temporary respite. Just when global businesses finally thought they knew where they stood regarding Trump's tariff position, the US president has again set the cat among the pigeons with a new announcement made last night. While on 3 April Trump declared tariffs of 54% on Chinese goods imported into the US (a figure which included previously imposed tariffs), he has now raised the tax to an even higher 125%. In a statement posted on Truth Social Trump said: "At some point, hopefully in the near future, China will realise that the days of ripping off the USA, and other countries, is no longer sustainable or acceptable." He claims that his reasoning for hiking the tariffs higher is based on "the lack of respect that China has shown to the world's markets" and confirmed that the 125% import tax would be "effective immediately". The move will prove devastating to sales of Chinese whisky, baijiu and wine, as well as for beers including Tsingtao, which is made in Chinese province Qingdao and exported around the world. According to Paulaner USA, the American importer for Tsingtao Premium Lager, the product has experienced "exceptional growth" in the US market over the last two years, though this growth may now be compromised.

China's response

Responding to the escalated tariffs, China's Foreign Ministry accused Trump of putting his own interests ahead of those of the international community, adding that the US is acting out of "selfish interests" and is using tariffs as a weapon to"seek selfish gains". "This undermines the rules-based trade system and destabilises global economic order," the Ministry said. The trade in goods between China and the US last year amounted to US$585 billion (£429bn).

Temporary respite

In the same breath, however, Trump revealed he has authorised a "90 day pause" for the rest of the world on paying the tariffs he confirmed a mere seven days ago. During this 90-day period, tariffs for all nations (excepting China) will be lowered to 10%. This will have little impact on regions such as the UK, Australia, New Zealand, Singapore and Argentina, which were already on 10% tariffs, but will be welcome news for EU nations which were last week hit with tariffs of 20%. Trump's official communication hinted that the reason for the 90-day pause was that more than 75 countries had contacted the US "to negotiate a solution" in response to last week's announcement. In an informal comment made to press he described international governments as getting "a little bit yippy, a little bit afraid." He also stressed that the temporary pause and lowering of tariffs was partly because these nations had not sought to retaliate "in any way, shape, or form against the United States."  

Retaliation quandary

Trump's temporary easement comes at an awkward time given that last night the EU approved retaliatory duties worth €22 billion on US goods. 26 of the EU's 27 member states voted on 9 April to impose the “rebalancing” duties, which are likely to apply to American products including tobacco, motorcycles, poultry, steel, and aluminium, though excludes Bourbon. The retaliatory tariffs are expected to come into force on 15 April. "The EU considers US tariffs unjustified and damaging, causing economic harm to both sides, as well as the global economy," the European Commission said in a statement following the vote, adding that it will continue to seek a "balanced and mutually beneficial" negotiated solution with Washington.