China Hits Back with 84% Tariff on U.S. Goods Amid Rising Trade Tensions

Beijing Plans New Economic Stimulus as Trade War Heats Up

China has announced a massive 84% tariff on all U.S. imports, effective from 12:01 AM today, in response to the U.S. raising tariffs on Chinese goods to 125%. This major move by Beijing marks a sharp escalation in the ongoing trade conflict between the two economic superpowers.

China’s Leadership to Discuss Stimulus Package

Top Chinese leaders are scheduled to meet on Thursday to roll out a fresh round of economic stimulus. The focus areas include:

Boosting the housing sector

Supporting consumer spending

Promoting technological innovation

Multiple financial bodies and regulatory agencies are also expected to join these meetings. The goal is to stabilize markets and cushion the economy from the impact of the trade dispute.

Trump’s Tariff Spree Triggers Global Market Volatility

U.S. President Donald Trump first raised tariffs on Chinese goods from 104% to 125%, while temporarily pausing tariff hikes for other trading partners. This aggressive trade policy has caused major swings in global financial markets.

However, Chinese stock markets rallied on Thursday as investors anticipated a strong stimulus response from the government. Meanwhile, the onshore yuan dropped to its lowest level since 2007.

Policy Shifts Expected from China’s Central Bank

To support the domestic economy, Chinese policymakers are expected to ease borrowing conditions. This may include:

Lowering interest rates

Reducing reserve requirements for banks

China has also started restricting outbound investments to the U.S., a strategic move that could strengthen Beijing’s position in upcoming trade talks.

Goldman Sachs Lowers China’s Growth Forecast

Due to rising trade tensions, Goldman Sachs has revised down its GDP forecast for China:

2025: From 4.5% to 4.0%

2026: From 4.0% to 3.5%

This downgrade reflects concerns about the long-term impact of tariffs on China’s economy.

China’s Commerce Ministry Rolls Out New Export Support Measures

To support businesses affected by the trade conflict, China’s Ministry of Commerce (MOFCOM) has announced several initiatives:

1. Boosting Domestic Demand

Policies such as the consumer goods trade-in program will be used to encourage people to buy more.

2. Promoting Local Sales of Export Goods

Campaigns like the “Foreign Trade Premium Products China Tour” will showcase export-quality products across Chinese cities.

3. Strengthening Trade Integration

MOFCOM plans to better integrate domestic and international trade to help companies stay flexible and competitive.

Trump Pauses Some Tariffs, Excludes China

President Donald Trump announced a 90-day pause on some tariffs, but China is excluded. Treasury Secretary Scott Bessent said the move is part of a strategy to push other countries to negotiate better trade deals. The decision came after financial markets dropped sharply, reminding many of early COVID-19 fears. Trump said people were overreacting and assured that better days are ahead. However, his unpredictable trade policies have confused global leaders and business owners. The pause doesn’t apply to Canada or Mexico either, and tariffs on autos, steel, and aluminum from non-USMCA countries will stay at 25%.

U.S. Treasury Secretary Bessent: “This Is Not a Trade War”

Despite the sharp rise in tariffs, U.S. Treasury Secretary Bessent claimed, “I wouldn’t call it a trade war.” He emphasized that countries choosing not to retaliate against the U.S. will be “rewarded”.

A 90-Day Tariff Pause for Some Goods

President Trump has also authorized a 90-day pause on some tariffs, particularly on reciprocal duties and the previous 10% levies. According to Bessent, this “pause” is meant for negotiations, not as a reaction to market pressure.

U.S. Open to Negotiations

Bessent said the U.S. is still open to talks and is waiting to see how China responds. He also noted that Wednesday’s 10-year Treasury bond auction went well, a sign of confidence in U.S. markets.

Final Thoughts

The U.S.-China trade war is entering a critical phase, with both sides taking bold steps. While Beijing plans economic stimulus to soften the blow, Washington says it’s still open to negotiation. For now, global markets and businesses are closely watching every move, hoping for a peaceful resolution.