The Chinese government has taken a proactive stance against the tariffs that the United States is planning to impose. Just a day after Donald Trump announced his intention to apply taxes on most foreign products, the Xi Jinping-led administration responded vigorously. As a result, all US imports will face a 34% tariff imposed by China effective April 10. This date was strategically chosen, as the tariffs approved by the Trump administration will come into effect on April 9. The Chinese leadership appears to have opted for a brief window of negotiation in hopes of reaching an agreement with the US and easing tensions.
China’s Response Targets a Vulnerability
In addition to implementing new tariffs, China has opted to suspend import licenses for products from six US companies and to tighten restrictions on the export of certain rare earth elements. This tactic of imposing export limits on critical commodities has been a recurring strategy by Xi Jinping’s government to apply pressure on the US and its allies. Notably, on December 21, 2023, the Chinese administration limited the export of specific rare earth processing technologies to safeguard its strategic interests amid a conflict with the United States and its partners.
Additionally, the export of essential minerals to the United States was banned in early December 2024. This prohibition includes three chemical elements—gallium, germanium, and antimony—which are crucial for the semiconductor sector and military applications due to their strength. However, it’s critical to understand that rare earth elements represent a significant resource. This unique group of elements includes rare metals with intriguing names like gadolinium, yttrium, scandium, promethium, and neodymium, among others. Their remarkable physicochemical properties, along with their rarity, contribute to their exceptional status.
With no other elements in the periodic table capable of matching their attributes, rare earths have escalated in value in various industries over the last few decades, particularly within semiconductors, electronics, and renewable energy sectors. For this reason, they are vital to the United States. The full extent of the recent export restrictions on rare earths enacted by the Chinese Ministry of Commerce remains unclear, but updates will be provided as more information becomes available. The US and China have a five-day window to reach a consensus before the new tariffs take effect. We’ll see if they are genuinely prepared to alleviate the tension.
The Global Stock Market Reacts to Tariffs Against China
Following the United States’ imposition of broad new tariffs, China’s Foreign Ministry stated on Saturday that the market had reacted, urging the White House to engage in equal-footed discussions to resolve the escalating trade conflict. U.S. stock markets faced a significant downturn for the second consecutive day on Friday, with all three major indices dropping over 5% amidst a global sell-off. As a response to this turmoil, China’s Finance Ministry declared that it would implement a 34% duty on all U.S. imports starting April 10.
Among the extensive new tariffs announced last Wednesday by President Donald Trump are a 10% duty on nearly all nations and significantly higher tariffs on numerous others. The retaliatory tariffs imposed on China were increased by an additional 34%, bringing the total U.S. tariffs against the world’s second-largest economy to 54%. Trump took to Truth Social to assert that the business sector is not concerned about the tariffs and affirmed that his policies would remain unchanged, appearing unfazed by the market’s reaction to the tariff announcement on Friday.
