Kathmandu. US President Donald Trump’s punitive tariffs on dozens of economies took effect on Wednesday. They include more than 100 percent tariffs on Chinese goods and dramatically escalate a devastating global trade war. After sweeping 10 percent tariffs that took effect over the weekend rocked the global economy, tariffs on imports from exporters such as the European Union (EU) and Japan were further increased at 12:01 a.m. (0401 GMT) on Wednesday.
China, Washington’s top economic rival but also a major trading partner, has been hit hardest. Tariffs on Chinese products have now reached a staggering 104 percent since Trump returned to the White House. Trump said on Tuesday that his government was working on “favorable deals” with trading partners, saying the White House would prioritize allies such as Japan and South Korea. His top trade official, Jamison Greer, also told the Senate that Argentina, Vietnam and Israel have offered to reduce their tariffs.
Trump said at a dinner with fellow Republicans on Tuesday night that the countries were “eager” to make a deal. “I’m telling you, these countries are calling us, licking me,” he said. But Beijing has shown no sign of backing down. China has vowed to fight the trade war “to the end” and to retaliate to protect its interests. China’s 34 percent tariffs on American goods are set to take effect on Thursday.
The US president believes his policies will revive America’s lost manufacturing base by forcing companies to relocate to the United States. But many trade experts and economists question how quickly — if ever — that could happen, warning of high inflation as tariffs push up prices.
Trump said on Tuesday that the United States was earning “about $2 billion a day” from the tariffs.
China ‘wants to make a deal’
Trump initially announced an additional 34 percent tariff on Chinese goods. But after China imposed its own tariffs of the same amount on American products, Trump added another 50 percent tariff. Counting the existing tariffs imposed in February and March, this would bring the cumulative tariff increase on Chinese goods to 104 percent during Trump’s second term.
Trump has insisted that the ball is in China’s court, saying Beijing “wants to make a deal badly, but doesn’t know how to start it.” Late Tuesday, Trump also said the United States would announce major tariffs on pharmaceuticals “very soon.” Separately, Canada said its tariffs on some US auto imports would take effect on Wednesday.
China ‘confident’
Hong Kong fell more than 3 percent and Japan’s Nikkei fell 2.7 percent as Asian markets reopened on Wednesday after trillions of dollars were wiped off global stock markets in recent days. Foreign exchange markets also fell. The South Korean won fell to its weakest level against the dollar since 2009 this week. China’s offshore yuan also fell to a record low against the US dollar on Wednesday as Beijing’s central bank moved to weaken the yuan.
The decline was the fifth consecutive day, according to Bloomberg. Oil prices fell. West Texas Intermediate closed below 460 for the first time since April 2021. The European Union (EU) has sought to ease tensions. The group’s head, Ursula von der Leyen, warned against escalating the trade conflict in talks with Chinese Premier Li Keqiang. He stressed the stability of the global economy and the need to “prevent further acceleration,” the EU statement said.
The Chinese premier told von der Leyen that he had “full confidence in maintaining sustainable and healthy economic growth” and that his country could “weather the storm.” The EU is expected to announce its response to the new 20 percent tariffs next week. Trump has been harshly critical of the EU’s tariff regime. The EU plans to impose tariffs of up to 25 percent on American goods ranging from soybeans to motorcycles in retaliation for US steel and aluminum tariffs that took effect last month, according to documents seen by AFP.
Adapted deals
Wall Street’s major indexes closed lower on Tuesday. The broad-based S&P 500 fell 1.6 percent. In a public sign of friction over tariffs, Trump’s top aide Elon Musk described senior White House trade adviser Peter Navarro as “dumber than a bag of bricks.” Musk was angered when Navarro, who had signaled his opposition to Trump’s trade policies, described his Tesla company as a “car assembler” that wanted cheap foreign parts.
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