China threatens retaliation through ‘all necessary measures’ as Trump hikes tariffs

Key topics:.China vows countermeasures against new US tariffs.Markets slump amid rising trade tensions.Beijing seeks talks but prepares retaliation..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here..Support South Africa's bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here..If you prefer WhatsApp for updates, sign up to the BizNews channel here..By Bloomberg News___STEADY_PAYWALL___.China threatened to hit back at Donald Trump's trade threats after the US president unveiled additional tariffs on Chinese imports, raising the risk of tensions spiraling between the world's largest economies.."If the US insists on having its own way, China will counter with all necessary measures to defend its legitimate rights and interests," a spokesperson for the Chinese Ministry of Commerce said Friday. In response to the last round of tariffs, the department previously vowed to take "corresponding" steps..Beijing's reaction came hours after Trump announced an additional 10% tariff would take effect March 4, citing drug flows from North American neighbors at "very high and unacceptable levels" and China's alleged role in its supply. The new levies follow a previous 10% duty implemented earlier this month and represent part of Trump's broad salvos that span technology and investment..A gauge of Chinese shares listed in Hong Kong extended a decline to fall as much as 3.9%, heading for its biggest single-day decline since October. The onshore benchmark CSI 300 Index slid as much as 1.9%, on course to suffer its first weekly loss in a month..The offshore yuan edged about 0.1% higher to 7.29 per dollar, paring some of its overnight decline, after the Chinese central bank signaled a preference to keep the currency stable. Yields fell across the curve on Friday as concerns over economic growth picked up following the US tariff threat.."Trump may be pressing his luck," said Chang Shu, chief Asia economist for Bloomberg Economics. She wrote in a note the risk is China's restraint so far "could shift to a more strident retaliatory stance — and a much more damaging trade war.".Trump's new measures came without public forewarning and took officials in both countries by surprise. Neither side on the working level was aware the additional 10% tariffs were coming, according to a person familiar with the matter..The levies are set to take effect on Tuesday, one day before President Xi Jinping heads into the party's biggest political meeting of this year, the National People's Congress, where his lieutenants will unveil their economic blueprint for 2025. .While the tariffs are unlikely to sway the growth target or fiscal policy for the year, which have been set for months, they could dampen sentiment. In a meeting hosted by Xi on Friday, China's elite Politburo reiterated a pledge to expand domestic demand as well as to stabilize the housing and stock markets — all topics likely on the agenda at next week's huddle..Keeping Calm.As tensions rise, Xi has called on his top officials to stay composed. The Chinese leader hasn't spoken with Trump since his inauguration, even though the US president said he expected a call with him this month..Both Beijing and Washington appear keen to prevent a breakdown in their relationship. Chinese Vice Premier He Lifeng spoke with Treasury Secretary Scott Bessent last week — the second high-level contact since Trump took office — while China's Defense Ministry said Thursday talks with the US military are in the works. .Beijing said in its response to the tariffs that it hoped to resolve differences through dialogue, illustrating its desire to reach a deal..China typically hits back at tariffs only after they come into effect. Beijing responded to the last round of levies just seconds after they kicked in, with measures including additional tariffs, an antitrust investigation into Google, tightened export controls on critical minerals, and the addition of two US companies to a blacklist of unreliable entities..Short of a last-minute deal, China could retaliate next week using those same tools and potentially reimposing some tariffs from the last trade war. .Since 2020, China's government has been suspending various tariffs it imposed on US imports, and those waivers all expire Friday. So far, the government hasn't said it would extend them, while it previously announced extensions in advance..Read more: 🔒 Apple's stock rebounds despite China slump and iPhone sales dip.Raymond Yeung, chief economist for Greater China at Australia & New Zealand Banking Group Ltd, expects the additional levy to have only marginal impact on GDP growth. However, what China does to offset this potential damage could actually help the economy, he said. ."What is very certain is China's reaction: offsetting this with more consumption and tech investment support," he added..Bloomberg economist Maeva Cousin said the shock of the existing and expected tariffs on the Chinese economy "should be manageable," citing the small share of its value added — just over 2% — tied to US exports.."In the medium term, it's also likely China will find new markets for its exports — although this may be met with resistance from partners in the rest of the world, already concerned about Chinese overcapacity in some sectors," Cousin wrote in a note on Friday. .Such pushback is already becoming apparent. Over the past week, both South Korea and Vietnam followed in Washington's footsteps and slapped tariffs on Chinese steel products to halt surging supplies from the world's biggest producer of the metal..The Trump administration is broadening its campaign against Beijing, announcing in recent days new curbs on investment flows between the two nations, proposed fees for anyone shipping goods to the US on Chinese-made vessels and is currently talking to Mexico about that nation also imposing tariffs on Chinese goods..The tariffs will also likely raise prices of US imports, as companies in China will try to pass on the increased costs to US customers. That impact could be even bigger than many expect, according to new research from the US Federal Reserve, which argued that US data is undercounting how much is actually imported from China. .The US action means the Chinese government will need to announce an additional stimulus worth 500 billion yuan ($69 billion) to 700 billion yuan to meet its growth targets, according to Michelle Lam, Greater China economist at Societe Generale SA. ."The news increases the chance of policymakers doing sufficient measures on the margin," she said. "But alternatively, they may still wait to assess the impact and see if future trade talks with the US can bring down tariffs.".Read also:.🔒 FT: China's oil demand peaks – A turning point for global energy marketsBest of 2024: China steals the show at Waterkloof defence showcase – Katzenellenbogen🔒 FT: "First Buddy" Elon is Trump's wild card in China dealings.© 2025 Bloomberg L.P.

China threatens retaliation through ‘all necessary measures’ as Trump hikes tariffs

Key topics:

Related Stories