It has begun.
At 12.01am EST (04:01 GMT) on Wednesday, President Donald Trump’s “reciprocal” trade tariffs took effect, hitting China the hardest with a 104 percent levy on goods sold to the US.
As negotiations with other trading partners began, the new tariffs on China mean that US imports from China now cost more than double what they did two months ago. In response, China raised its US tariffs to 84 percent.
Stock markets have plummeted since the announcement of US tariffs on numerous countries, signaling the start of a global trade war.
Trump has consistently accused countries, especially China, of taking advantage of the US in trade, justifying his protectionist policies to boost domestic manufacturing and bring back American jobs.
What is the status of US-China tariffs?
On February 3, Trump imposed a 10 percent tariff on all goods from China, increasing it to 20 percent on March 5 and then to 54 percent on April 2.
On April 4, China announced a 34 percent reciprocal tariff on US imports.
Trump threatened additional tariffs unless China reversed its levies on US goods, leading to a standoff between the two countries.
Despite Trump’s confidence in China backing down, Beijing raised its tariff on US goods to 84 percent on Wednesday.
What has China said in response to Trump’s tariffs?
China’s Commerce Ministry announced retaliatory tariffs on US exports on April 9, stating that Beijing is prepared to take necessary countermeasures.
China criticized the US actions as groundless and economic bullying, defending its tariffs as necessary to protect its interests and maintain a balanced international trade market.
China’s Foreign Ministry spokesperson emphasized China’s willingness to stand firm against challenges, portraying China as a country that does not seek trouble but will respond when faced with it.
How will tariffs impact China’s economy?
Despite tensions, the US and China remain significant trade partners, with the US importing billions of dollars in Chinese goods annually.
Goldman Sachs predicts that Trump’s tariffs could reduce China’s GDP by up to 2.4 percent, impacting the country’s growth rate and economic stability.
Analysts suggest that China’s economic growth could drop to 4 percent in 2025 due to the tariff hikes, potentially leading to a recession and other economic challenges.
China’s economy, already facing issues like deflation and a struggling property market, is expected to suffer further from the trade war with the US.
Despite the challenges, China is seen as better prepared than most countries to handle the repercussions of Trump’s trade policies.
How has Beijing responded so far?
Chinese officials are taking steps to stabilize the stock market and mitigate the impact of external influences.
Premier Li Qiang assured that the government can handle adverse effects from external factors, while public investment firms are increasing equity investments to support financial markets.
Chinese stock exchanges have performed relatively well compared to other Asian markets, showing signs of stability amidst the ongoing trade tensions.
The Chinese government is focused on stabilizing the stock market and minimizing potential disruptions.
Sepertinya sedang berjalan dengan baik sampai saat ini, tapi para investor di sini … beberapa dari mereka masih sangat gelisah,” kata Yu.
Apa yang akan dilakukan China selanjutnya?
Untuk mengurangi dampak tarif, Beijing kemungkinan akan fokus pada stimulus domestik dan meningkatkan hubungan dengan mitra perdagangannya untuk mencapai target pertumbuhan “sekitar 5 persen”, kata Ghosh, profesor ekonomi.
“Saya mengharapkan penurunan lebih lanjut dalam tingkat suku bunga yang sudah rendah di China beserta lebih banyak pinjaman oleh pemerintah daerah dan bantuan untuk pekerja ekspor yang terkena dampak,” katanya kepada Al Jazeera.
Ghosh menyarankan bahwa China akan “diam-diam” meningkatkan ekspor ke mitra perdagangannya, terutama di Global Selatan, melalui langkah-langkah seperti “pinjaman dan keringanan utang”.
Dia juga mengatakan bank sentral China mungkin akan membiarkan yuan melemah, dengan demikian menurunkan harga ekspor dan menutupi sebagian dari kerugian akibat tarif.
Meskipun Ghosh mengatakan bahwa ekonomi China sebesar $20 triliun “seharusnya mampu menyerap” dampak dari tarif AS, beberapa ekonom telah menyatakan kekhawatiran tentang posisi fiskal Beijing.
Pada 3 April, lembaga pemeringkat Fitch menurunkan peringkat kredit kedaulatan China, menyoroti utang pemerintah yang meningkat dengan cepat dan risiko terhadap keuangan publik, karena pembuat kebijakan bersiap untuk melindungi ekonomi dari kenaikan tarif.
Bagi Ghosh, namun, “ada kecenderungan Barat untuk melihat kejatuhan ekonomi China yang tidak terelakkan”.
“Saya jauh lebih khawatir tentang ekonomi AS,” katanya.