Donald Trump has sown the wind – and now America must reap the whirlwind. Beijing has today announced plans to slap an additional 34 per cent tax on all US imported goods from next Thursday. China had already applied tariffs – ranging from 10 to 15 per cent – to a range of American agricultural products after the last round of charges from the Trump administration.
But now, after Chinese goods were hit by this week’s hike, taking the rate to 54 per cent (the US had existing tariffs on China), Beijing has delivered fresh retaliation. Export controls have been imposed on seven rare earth elements critical to the production of consumer electronics. China has also filed a lawsuit with the World Trade Organisation in protest.
Following the announcements, European markets slumped further, with indexes in London, Berlin and Paris down more than 3 per cent. A wave of sell-offs has also wiped 5 per cent off the value of the Stoxx600 index, comprising Europe’s largest 600 companies. Nearly every share on the FTSE100 index is down today as it hit a three-month low.
Within Whitehall, there was some relief that the UK only had a 10 per cent tariff imposed. But still, a heavy economic hit looks inevitable. Downing Street hopes soon to unveil a limited trade deal with the US, but in the interim it will have to engage in more diplomacy with panicking European partners.
A No. 10 spokesman told journalists this morning that the government would be ‘engaging with international leaders over the weekend’. It’s Donald Trump’s world. We’re just living in it.
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