(Bloomberg) — China pledged to retaliate against Donald Trump’s latest tariff threat and stepped up efforts to support the market, raising the risk of a prolonged trade war between the world’s two largest economies.
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“The US threat to escalate tariffs on China is a mistake on top of a mistake,” the Chinese Ministry of Commerce said in a Tuesday statement. “If the US insists on its own way, China will fight to the end.”
The Chinese response came hours after Trump vowed to slap additional 50% import taxes on China unless it withdraws its tit-for-tat retaliation against his earlier levies. The blunt reaction suggests Beijing intends to resist the US president’s pressure campaign, dimming the prospect of a deal in the short term.
“The rhetoric from China is strong,” said Michelle Lam, greater China economist at Societe Generale SA. “Without Trump backing down investors may need to prepare for trade decoupling between both countries.”
Chinese authorities have signaled their determination to support markets. The central bank has loosened its grip on the yuan to boost the appeal of its exports and a group of state-linked funds known as the national team scooped up assets. Officials also promised loans to help stabilize the market and were reported to have considered frontloading some stimulus.
The yuan slid to the weakest level since September 2023 in onshore trading and hit a two-month low offshore on Tuesday. The Hang Seng China Enterprises Index (^HSCE) jumped as much as 3.7% after capping its worst loss since the financial crisis in the previous session.
As of 3:41:04 PM GMT+8. Market Open.
Trump’s latest charge would pile onto a 34% “reciprocal” duty set to kick in April 9, as well as a 20% hike implemented earlier this year, according to a White House official. That takes the cumulative tariff rate announced this year to 104% — effectively doubling the import price of any goods shipped from China to the US.
The Chinese Ministry of Commerce also called for dialogue to resolve disputes in its statement, despite Trump’s warning that “all talks with China” about a meeting will be terminated if Beijing doesn’t take action, without specifying what would be required.
The escalation in tensions makes any imminent call between the two world leaders less likely. Trump hasn’t spoken with Chinese President Xi Jinping since returning to the White House, the longest a US president has gone without talking to his Chinese counterpart post-inauguration in 20 years.
