United States President Donald Trump’s new trade tariffs have officially taken effect, with a 104% tariff now placed on Chinese goods.
The tariffs, which started early Wednesday, are part of Trump’s broader plan to reshape global trade.
China, the U.S.’s biggest trade partner, is the most affected country, as it faces the heaviest levies.
Speaking on Tuesday night, Trump said his government was working on “tailored deals” with friendly countries like Japan and South Korea. He also told fellow Republicans at a dinner event:
“I’m telling you, these countries are calling us up kissing my ass.”
The U.S. leader claimed the tariffs were bringing in nearly $2 billion daily and said he plans to announce another major tariff on pharmaceuticals soon.
China, however, is not backing down. Its officials have said they will “fight the trade war to the end” and plan to introduce their own 34% tariff on U.S. goods starting Thursday.
Trump had earlier placed a 34% tariff on Chinese imports, but after China responded with a similar action, he increased it by another 50%, bringing the total new duty to 104%.
Trump said China “wants to make a deal badly, but they don’t know how to get it started.”
Financial markets have reacted badly to the tariff news:
- Hong Kong stocks dropped more than 3%
- Japan’s Nikkei fell by 2.7%
- Taiwan’s stock market lost 5.8%
- The South Korean won hit its lowest point since 2009
- China’s offshore yuan also fell to a record low
Analyst Stephen Innes warned that China is struggling to handle the pressure, “Letting the yuan grind lower at this measured pace won’t offset the blow from a full-blown tariff barrage… The levies are simply too big.”
The price of oil also dropped, with West Texas Intermediate (WTI) falling below $60 for the first time since April 2021.
Other countries are reacting as well. Canada will start its own tariffs on U.S. auto imports, and the European Union has warned against making the trade crisis worse. EU Commission President Ursula von der Leyen told China’s Premier Li Qiang that the world economy needs “stability” and efforts to “avoid further escalation.”
Still, the EU is preparing to hit back too. In response to earlier U.S. tariffs on steel and aluminum, it plans to tax American goods like soybeans and motorcycles by up to 25%.
In a sign of growing tensions inside the U.S., billionaire Elon Musk called Trump’s trade adviser Peter Navarro, “Dumber than a sack of bricks.”
Navarro had earlier dismissed Tesla as just a “car assembler” that depends on cheap foreign parts.
As the global trade war grows, experts warn the cost of goods could rise, and the world economy may face deeper trouble.
