China retaliates against Trump's 'trade tyranny' with 84% tariffs

China's finance ministry has announced an 84% tariff on goods imported from the US, retaliating against recent levies imposed by the White House.

The hike in tariffs, from 34%, came after US President Donald Trump's 104% tariff on Chinese goods came into force on Wednesday - they were later increased to 125%.

Trump said the 21% rise was "based on the lack of respect" China had shown, and that it would be "effective immediately".

Beijing, which has said its charges would take effect from Thursday, urged other countries to unite against Trump's tariffs as the country's exporters reel from the crippling new levies.

"Global unity can triumph over trade tyranny," declared an editorial in the state-run newspaper China Daily, noting Beijing's collaborations with Japan, South Korea and other Asian economies.

A separate piece called for the European Union to work with it to "uphold free trade and multilateralism".

The US's trade war with China continued to escalate on Wednesday. Hours after Trump's highest tariffs on a raft of countries came into force, China retaliated with its own 84% levy on US imports.

European markets dropped shortly after the announcement, with the FTSE 100 falling by 3.3% and Germany's Dax 4%.

Trump later took to his Truth Social platform to say that, in return, he was upping the US's levies on China to 125%.

"At some point, hopefully in the near future, China will realise that the days of ripping off the USA, and other Countries, is no longer sustainable or acceptable," the US president wrote.

He also announced a 90-day pause on higher tariffs for dozens of countries -except China - saying this was because those nations had not "at my strong suggestion, retaliated in any way, shape, or form against the United States".

Beijing "firmly opposes and will never accept such hegemonic and bullying practices", foreign ministry spokesperson Lin Jian told reporters on Wednesday - before the latest hike from Washington.

The tariffs come at a difficult time for China's sluggish economy: domestic consumption remains weak and exports are still a major driver of growth.

The sweeping nature of Trump's tariffs has also left Chinese businesses scrambling to adjust their supply chains - with most countries affected, firms say it's hard to find a way out of this uncertainty.

The tariffs will shrink "already razor-thin profit margins", said the owner of a Chinese business that handles cross-border logistics for e-commerce, as well as air and sea freight. He did not wish to share his name.

"Higher tariffs raise costs for freight forwarders like us, as well as for factories, companies, and sellers. It just means everyone earns less."

Any tariff upwards of 35% will wipe out all the profits that Chinese businesses make when exporting to the US or South East Asia, said Dan Wang from the Eurasia Group consultancy.

"Growth is going to be much lower since exports contributed to 20% to 50% of growth since the Covid pandemic," she added.

Beijing is reportedly considering banning Hollywood films and suspending fentanyl cooperation with the US, according to Chinese blogger Liu Hong, who is a senior editor at state-run Xinhua news.

But that would offer little comfort to firms like Fuling, which sells disposable tableware to US fast food restaurants like McDonald's and Wendy's.

It said the additional tariffs would "significantly impact" its business. Fuling noted that nearly two-thirds of the company's revenue in 2023 and the first half of last year came from the US.

To mitigate the impact of tariffs, Fuling, which is headquartered in China's Zhejiang province, started a new factory in Indonesia late last year.

However, Trump's new tariffs have introduced more uncertainty for Chinese exports from Indonesia, which are now subject to a 32% levy, the company said in a corporate filing.

Indonesia was hit along with much of the world in President Trump's announcement of expansive tariffs last week, which he claimed would allow the US economy to flourish.

But economists have warned of a US and global recession. The tariffs have also shaken world markets and drawn criticism from billionaire CEOs, including Trump's ally Elon Musk.

While China has left the door open for talks, Trump has not spoken to Chinese leader Xi Jinping since returning to the White House.

Such broad, sweeping tariffs will cause more harm than good, the American Chamber of Commerce in China said in a note to its member companies on Wednesday.

"This level of upheaval is unprecedented, and it remains unclear how the current measures will benefit consumers in either nation or the broader economy," read the note signed by Chair Alvin Liu and President Michael Hart.

Some analysts believe the levies will force China to restructure its economy and rely heavily on domestic consumption, which it has been struggling to boost.

Otherwise, the tariffs will not be sustainable for China in the longer term, Tim Waterer from brokerage KCM Trade said.

"The tariffs are aimed at suppressing China," said the manager of a Chinese freight company, who asked to remain anonymous.

He added that many of the South East Asian countries that have been hit with steep tariffs are "exactly where many Chinese businesses have relocated", such as Vietnam and Cambodia.

The Tianjin-based company plans to negotiate with some of its American clients to share the burden of the tariffs. "Every case is different, but overall, the impact has been quite substantial," he said.

Another freight company manager Wu Changchun, whose firm mainly operates on shipping routes between China and Cambodia, said he is already seeing a fall in freight volume.

Several construction projects in Cambodia have also come to a halt after Trump's tariffs announcement, he said.

"If the tariffs were at 10% or 20%, businesses might still be able to absorb the cost by optimising supply chains, cutting margins and sharing the burden. Trade could still go on... [But at 104%] that's no longer something trade-offs can fix," said Mr Wu, a general manager at Maritima Maruba.

"That's full-on decoupling. Trade would basically come to a standstill."

Additional reporting by Annabelle Liang