Breaking: China announces additional 84% tariffs on US goods from April 10
China's Finance Ministry said on Wednesday that they will impose additional 84% tariffs on US imports from April 10, per Reuters, up from the 34% previously announced.
This decision arrived after China’s State Council, several government and regulatory bodies reportedly held a meeting earlier in the day to discuss a response to US President Donald Trump’s 104% tariffs on Chinese goods.
Meanwhile, China's Commerce Ministry said that they have added 12 US entities to the export control list and added six entities to the 'unreliable entity' list.
Market reaction
US stock index futures turned sharply lower with the immediate reaction to this development. At the time of press, S&P 500 Futures were down 1.3% on the day.
The US Dollar (USD) stays under bearish pressure as well, with the US Dollar Index losing about 0.6% at 102.25.
Tariffs FAQs
Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.
Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.
There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.
During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
