Tensions between the U.S. and China just got a lot hotter. Beijing has announced a major tariff increase on American imports, pushing levies up to a staggering 84%, starting April 10. This move is in direct response to Trump’s recent tariff hike on Chinese products, which now top 104%.
The tit-for-tat measures have intensified what’s become a full-blown trade war between the world’s two largest economies. Just last week, Trump’s administration rolled out a sweeping tariff policy, warning other countries not to push back. But China wasted no time, firing back with a harsh countermeasure targeting key U.S. exports.
Trade between the U.S. and China is massive. In 2024, the U.S. exported $143.5 billion worth of goods to China, while importing nearly $439 billion. With these new tariffs in place, that flow of goods is expected to slow dramatically, hurting businesses on both sides of the Pacific.
What started as an effort by the Trump administration to crack down on foreign trade practices and restrict the flow of fentanyl into the U.S. has now ballooned into an economic standoff. Earlier moves included tariffs on China, Canada, and Mexico, but the latest escalation is grabbing headlines, and shaking up global markets.
Investors are rattled. Since the announcement of Trump’s April 2 tariff package, the S&P 500 has dropped nearly 20% from its recent peak, officially entering bear market territory. Markets in Asia aren’t faring any better, South Korea’s Kospi Index is also down, while stocks in Shanghai and Hong Kong have been sharply declining.
China has signaled it’s not backing down, while the Trump administration insists it’s holding the line against what it sees as unfair trade practices. But for now, the only certainty is more uncertainty, and a lot of nervous investors watching how far this trade war will go.
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