Trade War Escalates as China Raises Tariffs on U.S. Goods to 84%

The ongoing trade war between China and the United States heightened with China imposing a significant increase in tariffs on American imports, raising them to 84% from a previous rate of 34%. This decision, effective on April 10, was made in response to the United States’ escalation that increased tariffs on Chinese goods to more than 100% from April 9 [para. 1][para. 2]. This retaliatory measure follows U.S. President Donald Trump’s announcement of an additional 50% levy on Chinese imports, raising overall U.S. tariffs on Chinese goods to 104%, with products already subject to 25% punitive tariffs now facing 129% [para. 3].

The U.S. has also targeted cross-border e-commerce, increasing duties on small packages valued under $800, potentially impacting billions in direct-to-consumer shipments [para. 4]. In retaliation, China filed a new complaint with the World Trade Organization, labeling the U.S. actions as "unilateral and bullying" [para. 5]. Analysts warn that these taxes impose significant pressure on supply chains, leaving American buyers to either absorb high costs or reconfigure their supply chains [para. 6].

China previously introduced tariffs on U.S. goods, including agricultural products, with recent measures raising tariffs between 94% and 99%. These actions are expected to reduce American exports to China while promoting domestic manufacturing as alternatives [para. 7]. In 2024, China ranked as the fourth-largest source of imports for the U.S., primarily importing grains, oilseeds, minerals, chemical products, and machinery [para. 8].

High-value technology sectors in China, such as semiconductor equipment and precision instrument components, are anticipated to face immediate challenges but are expected to accelerate domestic production despite being a smaller portion of U.S. imports. Additionally, agricultural commodity prices like soybeans are predicted to surge as buyers adjust supply networks [para. 9]. China, being the largest market for several U.S. exports like soybeans and cotton, will affect American exporters significantly [para. 10]. While China sources 21.07% of its soybeans from the U.S., Brazilian suppliers dominate with 71.07% of imports, offering temporary relief with peak exports until August [para. 11].

Electronics manufacturers are expected to experience widespread disruption, prompting increased domestic sourcing and supply line diversification to Japan, South Korea, and Europe. Semiconductor industries may shift production to China, which could accelerate localization of manufacturing processes [para. 12]. The aerospace sector is particularly vulnerable, with U.S. manufacturers providing significant portions of China’s aircraft purchases. Tariffs may redirect orders to other manufacturers and expedite China's ambitions in developing its aviation industry [para. 13].

Besides tariff actions, China’s Ministry of Commerce expanded its export control list and added U.S. companies dealing in dual-use items, those with civilian and military applications, as well as unreliable entities to its list, prohibiting their trade and investment with China [para. 14][para. 15]. This escalation indicates a deepening trade conflict with significant ramifications for global trade and economic alignments [para. 16].