US will China hits back with 34 % tariffs on all US products

Context

• China announced on Friday that it will impose a 34% tariff on imports of all U.S. products beginning April 10, part of a flurry of retaliatory measures following U.S. President Donald Trump’s “Liberation Day” slate of double-digit tariffs.

• The new tariff matches the rate of the U.S. “reciprocal” tariff of 34% on Chinese exports that President Trump ordered this week.

• The Commerce Ministry in Beijing also said in a notice that it will impose more export controls on rare earth elements, which are materials used in high-tech products such as computer chips and electric vehicle batteries.

• Included in the list of minerals subject to controls was samarium and its compounds, which are used in aerospace manufacturing and the defence sector.

• Another element called gadolinium is used in MRI scans.

• The U.S. is the world’s largest importer of manufactured goods, accounting for about 13% of global imports in 2023.

• In the immediate term, the cost of imports will rise for American consumers, leading to reduced demand.

• The ripple effects will be global, causing production slowdowns as exporters scramble to find alternative markets. • Economies such as China, Japan, India and the European Union are likely to experience a temporary decline in economic growth.

• Today, China commands the largest share of global trade, at around 14%, while the U.S. has slipped to roughly 10%.

• The world’s leading exporters of advanced technologies are now China and other Asian powers, including South Korea, Japan, and Taiwan.

• Thus, Mr. Trump’s turn to protectionism — an attempt to regain American economic dominance — may well hasten the country’s retreat from its hegemonic position.