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LAST UPDATE | 9 Apr
CHINA HAS SAID is it raising tariffs on US products to 84%.
Its finance ministry made the announcement today after US President Donald Trump yesterday imposed a staggering tariff of 104% on China.
China is a top economic rival of the US but also a major trading partner and is the hardest hit country from Trump’s tariffs.
Beijing had vowed to fight a trade war “to the end” and promised countermeasures to defend its interests.
Trump originally unveiled a 34% additional tariff on Chinese goods.
But after China countered with its own tariff of the same amount on American products, Trump piled on another 50% duty.
Counting existing levies imposed in February and March, that would take the cumulative tariff increase for Chinese goods to 104%.
Trump has insisted the ball was in China’s court, saying Beijing “wants to make a deal, badly, but they don’t know how to get it started.”
The US president believes his policy will revive America’s lost manufacturing base by forcing companies to relocate to the United States.
But many business experts and economists question how quickly – if ever – this can take place, warning of higher inflation as the tariffs raise prices.
Trump claimed yesterday that the US was “taking in almost $2 billion a day” from tariffs.
Speaking to The Journal’s Explainer podcast, Professor Edgar Morgenroth of the DCU Business School remarked that this is “already a trade war”.
“The reality is we are in a trade war, and that can escalate and can get a lot worse.”
He also remarked that Trump’s threats of higher tariffs become an “empty threat” after tariffs reach a certain threshold.
Trump originally placed a 34% additional tariff on China and later imposed another 50% levy.
“Trump placing another 50% tariffs on Chinese goods, it could be enough to basically make the US an unviable market,” said Morgenroth.
“If 34% brings your trade in certain goods to zero, putting on an extra 50% makes no difference at all.
“This threat by Trump about higher and higher tariffs is really kind of an empty threat, because when tariffs are at a high enough level, an additional bit of tariff isn’t going to change anything.”
Meanwhile, Trump has said that he will soon put tariffs on pharmaceuticals, as he ramps up the worrying trade war.
Punishing tariffs on dozens of economies came into force this morning and late last night, Trump said: ”We’re going to tariff our pharmaceuticals… we’re going to be announcing very shortly a major tariff on pharmaceuticals.
“When they hear that, they will leave China, they will leave other places, because most of their product is sold here.”
Industry group the Irish Pharmaceutical Healthcare Association previously told The Journal that it believes the real impact in the dispute between the White House and the EU will be seen “four or five years from now”.
This is due mainly to the timescale for investment in the industry’s large scale manufacturing plants.
This timescale could create “significant commercial challenges” for US companies based here, which includes major names like Pfizer, Johnson & Johnson and MSD.
There are around 50,000 people employed across Ireland in the pharma sector, with an estimated 30,000 working for US companies with plants here.
There was a sigh of relief when pharma wasn’t included in the first wave of tariffs, but the industry was under no illusions that it would go unscathed, as Trump previously singled-out Irish pharma companies for being “very smart”.
Following the imposition of sweeping 10% have rocked the global economy since coming into force over the weekend, rates on imports to the United States from exporters like the European Union or Japan rose further at 12.01am (04.01am Irish time) this morning.
European stock markets sank this morning as Trump’s new tariffs came into effect and triggered a fresh sell-off in global equities.
Paris and Frankfurt were down around 1.8% in early deals, as goods from the European Union now face a 20% tariff when entering the United States.
Here, the ISEQ fell by 2.7% seconds after opening. Banks were badly impacted, as Permanent TSb and Bank of Ireland saw dips of over 4%.
London slid 1.9%, with Britain having been hit with a 10% levy on Saturday.
Trump said he his government was working on “tailored deals” with trading partners, with the White House saying it would prioritise allies like Japan and South Korea.
His top trade official Jamieson Greer also told the Senate that Argentina, Vietnam and Israel were among those who had offered to reduce their tariffs.
Trump told a dinner with fellow Republicans on Tuesday night that countries were “dying” to make a deal.
I’m telling you, these countries are calling us up kissing my ass.
Separately, Canada said that its tariffs on certain US auto imports will come into force Wednesday.
The European Union has sought to cool tensions, with the bloc’s chief Ursula von der Leyen warning against worsening the trade conflict in a call with Chinese Premier Li Qiang.
She stressed stability for the world’s economy, alongside “the need to avoid further escalation,” said an EU readout.
The Chinese premier told von der Leyen that his country could weather the storm, saying it “is fully confident of maintaining sustained and healthy economic development.”
The EU – which Trump has criticised bitterly over its tariff regime – may unveil its response next week to new 20% levies it faces.
In retaliation against US steel and aluminum levies that took effect last month, the EU plans tariffs of up to 25% on American goods ranging from soybeans to motorcycles, according to a document seen by AFP.
Wall Street’s major indices closed lower Tuesday, with the broad-based S&P 500 falling 1.6%.
In one public sign of friction over tariffs, key Trump ally Elon Musk described senior White House trade advisor Peter Navarro as “dumber than a sack of bricks.”
Musk, who has signaled his opposition to Trump’s trade policy, hit out after Navarro described his Tesla company as “a car assembler” that wants cheap foreign parts.
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