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China Roars Back with 34% Tariffs On All US Products

ElitePersonalFinance

Last Update: April 5, 2025 • Financial News •

In response to the Trump administration’s recent tariff declaration, China has responded by imposing a 34% tariff on all US products.

Taking effect on April 10th (barring any successful negotiations), the new tariff is the same as US tariffs. In addition, Beijing promises to enact more export control on rare earth minerals used throughout VARIOUS KEY SECTORS, e.g., MRI scan machines, computer chips, semiconductors, and compounds used in aerospace.

At the same time, the White House put out a statement on its website stating, “President Trump’s Bold Action Draws Praise,” by citing actions by automakers such as Nissan’s recent announcement it will keep its two shifts at its Tennessee production plant and a recent decision by General Motors to increase Indiana assembly plant truck production. Plus, Ford Motor Company in Stellantis also agreed to reduce the price of its vehicles to employee pricing.

How Has The Stock Market Reacted?

The stock market continues to take a nosedive, with the Dow falling over 1000 points amidst the escalating trade War. The NASDAQ also saw its worst trading days since 2020, and the top seven stocks lost a combined $1T dollars in market value alone. Popular mainstream stocks like HIMS and Chinese multi glomerate BABA have fallen by over 10%. On April 3rd, the stock market had its worst-ever drop since 2020, and it remains to be seen how it all plays out.

Other stocks like Tesla, Nvidia, Apple, and Meta also fell in the single-digit percentages.

What Did Federal Reserve Chair Jerome Powell Say?

In the first remark since the tariffs were announced in the April 4th press conference, Jerome Powell cited the increased likelihood of a temporary Rising inflation. However, he has also suggested that its benchmark interest rate will remain at roughly 4.3% within the next several months.

“Our obligation is to keep longer-term inflation expectations well anchored and to make certain that a one-time increase in the price level does not become an ongoing inflation problem,” said Powell. “We are well positioned to wait for greater clarity before considering any adjustments to our policy stance. It is too soon to say what will be the appropriate path for monetary policy.”

“While tariffs are highly likely to generate at least a temporary rise in inflation, it is also possible that the effects could be more persistent,” he continued. “Avoiding that outcome would depend on keeping longer-term inflation expectations well anchored, on the size of the effects, and on how long it takes for them to pass through fully to prices.”

Regarding investment banks, JP Morgan also predicted a 60% chance of the US economy being in a recession before the end of 2025. Before, it cited 40%.

“Disruptive US policies have been recognized as the biggest risk to the global outlook all year,” said JP Morgan’s chief economist Bruce Kasman in a client note. “The latest news reinforces our fears, as US trade policy has turned decisively less business-friendly than we had anticipated.”

“We thus emphasize that these policies, if sustained, would likely push the US and possibly global economy into recession this year. An update of our probability scenario tree makes this point, raising the risk of a recession this year to 60%,” he continued.

Last week, brokerage Powerhouse Goldman Sachs also boosted the chances of a US recession to 35% from 20% due to a grim economic Outlook and lowered business and consumer confidence.

Trump’s Social Media Fervor

In true Trump fashion, he lashed out at one of his trading partners, Jerome Powell, and reiterated the purpose of the tariffs in a series of True social posts.

“CUT INTEREST RATES, JEROME, AND STOP PLAYING POLITICS!” wrote Trump in a recent Truth social post.

In another Friday morning social media post, Trump blasted China for its tariff decision.

“CHINA PLAYED IT WRONG, THEY PANICKED – THE ONE THING THEY CANNOT AFFORD TO DO!” he wrote.

“TO THE MANY INVESTORS COMING INTO THE UNITED STATES AND INVESTING MASSIVE AMOUNTS OF MONEY, MY POLICIES WILL NEVER CHANGE. THIS IS A GREAT TIME TO GET RICH, RICHER THAN EVER BEFORE!!!” read another post.

How Are Negotiations With Countries Going?

At the moment, it’s very early to tell. However, there have been early inroads. In another recent Trust Social post, Trump claimed that Vietnamese President To Lam once cut tariffs down to 0% in response to the whopping 46% tariff placed on Vietnam, one of the United States most significant trading partners with a record high of $138B in Goods traded between the two countries.

Other countries, like the tiny island of Madagascar off the coast of east Africa, face severe threats due to their expertly dependent economies. Its main export is vanilla, with 70% of its total output exported to the United States. In turn, the Trump administration has imposed a 47% tariff.

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