China retaliates as Trump trade tariffs kick in

China will impose 84 per cent tariffs on US goods from Thursday, up from the 34 per cent previously announced, its finance ministry said on Wednesday, firing the latest salvo in a global trade war sparked by US President Donald Trump.

Trump's "reciprocal" tariffs on dozens of countries took effect earlier on Wednesday, including massive 104 per cent duties on Chinese goods. The European Union is also preparing its own retaliatory measures for later on Wednesday.

Trump's punishing tariffs - which he says aim to end US trade deficits with many countries - have upended a global trading order in place for decades, raising fears of recession and wiping trillions of dollars off the market value of major firms.

Global markets took a pummelling on Wednesday as Trump's eye-watering 104 per cent tariffs on China came into effect, and a savage selloff in US bonds sparked fears that foreign funds were fleeing US assets.

Markets fell further after China retaliated. European shares extended their losses. Oil prices plunged to even deeper four-year lows and US stock index futures fell sharply.

As it announced its new tariffs, China's finance ministry said in a statement: "The US escalation of tariffs on China is a mistake on top of a mistake, which seriously infringes on China's legitimate rights and interests and seriously undermines the rules-based multilateral trading system."

Beijing also imposed restrictions on 18 US companies, mostly in defence-related industries, adding to the 60 or so American firms punished over Trump's tariffs.

China's move to impose 84 per cent retaliatory tariffs is a losing proposition for Beijing, US Treasury Secretary Scott Bessent said.

"I think it's unfortunate that the Chinese actually don't want to come and negotiate, because they are the worst offenders in the international trading system," he told Fox Business Network.

This week had already brought crisis-era volatility to markets, wiping trillions of dollars off the value of stocks and hammering commodities and emerging markets.

US Treasuries were also caught up in the market turmoil and extended heavy losses in a sign investors are dumping even their safest assets, and the dollar, a traditional safe haven, was weaker against other major currencies.

"The US and China are stuck in an unprecedented, and expensive, game of chicken, and it seems that both sides are unwilling to back down," said Ting Lu, chief China economist at Nomura.

Trump nearly doubled duties on Chinese imports, which had been set at 54 per cent last week, in response to previous counter-tariffs from Beijing.

Earlier on Wednesday, China called its trade surplus with the United States an inevitability and warned it had the "determination and means" to continue the fight if Trump kept hitting Chinese goods.

China's currency has faced heavy downward pressure, with the offshore yuan at record lows due to the tariffs. But sources told Reuters the central bank has asked major state-owned banks to reduce US dollar purchases and would not allow sharp yuan declines.

Since Trump unveiled his tariffs on April 2, the S&P 500 has suffered its deepest loss since the benchmark's creation in the 1950s.

Global drugmakers' stocks dropped across the board on Wednesday after Trump reiterated plans for a "major" tariff on pharmaceutical imports.

Trump has shrugged off the market rout and offered investors mixed signals about whether the tariffs will remain in the long term, describing them as "permanent" but also boasting that they are pressuring other leaders to ask for negotiations.

"I am telling you, these countries are calling us up, kissing my ass," Trump told a Republican event on Tuesday in Washington.

"They are dying to make a deal. 'Please, please sir, make a deal. I'll do anything, I'll do anything sir,'" Trump said mockingly imitating a foreign leader.

On Wednesday, he said on his Truth Social platform: "This is a GREAT time to move your COMPANY into the United States of America."

He added: "ZERO TARIFFS, and almost immediate Electrical/Energy hook ups and approvals. No Environmental Delays. DON’T WAIT, DO IT NOW!"

European Union countries were expected to approve later on Wednesday the bloc's first countermeasures against Trump's tariff barrage on Wednesday, joining China and Canada in pushing back.

The European Commission, which coordinates EU trade policy, has proposed extra duties, mostly of 25 per cent, on US imports ranging from motorcycles, poultry, fruit, wood, and clothing to dental floss, according to a document seen by Reuters.

They are to enter into force in stages.