WASHINGTON: The US-China trade war intensified Thursday, sending the global economy into unknown territory and dampening relief after President Donald Trump’s earlier climbdown from a wider tariff onslaught against the rest of the world.
The White House clarified that Trump’s big hike in tariffs on China announced 24 hours earlier had actually taken his total levies this year on imports from the world’s second biggest economy to a staggering total of 145 percent – not the previously reported 125 percent.
This was because latest tariff hike comes on top of a 20 percent tariff already imposed earlier. China has retaliated with levies of 84 percent on US imports.
The superpower confrontation threw a deep shadow over jubilation that Trump was retreating from threats to impose punishing tariffs on dozens of other countries – everywhere from European Union allies to Asian manufacturing hubs like Vietnam and even tiny, remote ocean islands.
Trump maintained a blanket 10 percent tariff on most countries. However, his retreat from more damaging levies against European countries prompted the EU to pause plans for its own retaliation.
Amid relief, Asian and European stock markets rocketed, with Tokyo closing 9.1 percent higher.
But realization that Trump’s splashy about-face on Wednesday masked the reality of a surging trade war with China dampened spirits.
Trump’s 10% baseline tariff likely to remain: top economic advisor
The Dow Jones in New York fell more than three percent and the S&P dropped 4.5 percent in morning trading. Gold prices hit a record high as the US dollar crumbled.
EU wants negotiations
Trump says he wants to use tariffs to reorder the world economy by forcing manufacturers to base themselves in the United States.
Howard Lutnick, his commerce secretary, was bullish, posting on social media Thursday that “the Golden Age is coming. We are committed to protecting our interests, engaging in global negotiations and exploding our economy.”
Amid questions over how far Trump is ready to push, the European Union welcomed the US president’s partial row-back on his original threat to impose 20 percent tariffs against the bloc.
The 27-nation grouping responded with its own olive branch, suspending for 90 days tariffs on 20 billion euros’ worth of US goods that had been greenlit in retaliation to duties on steel and aluminum.
“We want to give negotiations a chance,” EU chief Ursula von der Leyen said in a statement.
She warned, however, that “if negotiations are not satisfactory, our countermeasures will kick in” and that all options remain on the table.
Canadian Prime Minister Mark Carney called Trump’s reversal a “welcome reprieve” and said Ottawa would begin negotiations with Washington on a new economic deal after elections on April 28.
Vietnam said it had agreed with the United States to start trade talks, while Pakistan is sending a delegation to Washington.
In its latest measure, Beijing announced it would reduce the number of Hollywood films imported, but said it remained ready for dialogue.
“We hope the US will meet China halfway, and, based on the principles of mutual respect, peaceful coexistence and win-win cooperation, properly resolve differences through dialogue and consultation,” Commerce Ministry spokeswoman He Yongqian said.
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