China Strikes Back with 34% Tariff on U.S. Goods, Escalating Global Trade Tensions

BEIJING/WASHINGTON/BRUSSELS, April 4 — China on Friday announced a sweeping 34% tariff hike on a wide range of U.S. imports, marking the most aggressive retaliation yet in the intensifying trade dispute with President Donald Trump’s administration. The move sent shockwaves through global markets already reeling from Washington’s recent tariff hikes and deepened fears of a global economic downturn.

As part of its broader countermeasures, Beijing also introduced fresh export controls on select rare earth materials and filed a formal complaint with the World Trade Organization. In addition, 11 foreign entities — including firms linked to arms sales to Taiwan — were added to China’s "unreliable entity" list, enabling Beijing to impose punitive actions against them. China views Taiwan as a breakaway province and strongly opposes any foreign military support to the island.

The escalation comes on the heels of the Trump administration’s decision to impose the most extensive U.S. tariff increases in over a century, prompting a wave of retaliatory measures from nations including Canada and China. The resulting uncertainty has triggered a sell-off in global equity markets, wiping out more than $2.4 trillion from U.S. stock valuations alone in the past 48 hours.

J.P. Morgan revised its global economic outlook following the latest developments, raising the probability of a worldwide recession by the end of the year to 60%, up from its previous estimate of 40%.

U.S. stock futures tumbled sharply Friday morning, indicating further losses ahead on Wall Street. Technology giants with significant exposure to Chinese and Taiwanese manufacturing — including Apple Inc. and Nvidia Corp. — led the decline in premarket trading.

“China comes out swinging with an aggressive response to Trump’s tariffs,” said Stéphane Ekolo, Market & Equity Strategist at Tradition in London. “This is significant, and it's unlikely to be the end. Markets are pricing in the growing risk of an entrenched tit-for-tat trade conflict.”

In Japan, Prime Minister Shigeru Ishiba described the situation as a “national crisis” after Tokyo's stock exchange faced its steepest weekly losses in years, with financial stocks leading the downturn.

U.S. Secretary of State Marco Rubio sought to calm concerns, rejecting the notion of a looming economic crash. Speaking at a press conference in Brussels, Rubio asserted that markets were reacting to a fundamental restructuring of global trade dynamics.

“Their economies are not crashing. Their markets are reacting to a dramatic change in the global order in terms of trade,” he said. “The markets will adjust.”

Europe Caught in the Middle

Meanwhile, European markets were on course for their worst weekly performance in three years. The European Union's Trade Commissioner, Maroš Šefčovič, urged restraint and emphasized the bloc’s commitment to diplomatic engagement.

“We will not shoot from the hip — we want to give negotiations every chance to succeed and find a fair deal for both sides,” Šefčovič stated on social media.

However, divisions persist within the EU over how to respond to Washington’s tariffs. Some member states have called for deploying the bloc’s new Anti-Coercion Instrument, a legislative tool designed to counteract economic pressure from third countries, while others favor a more measured approach.

As the world’s two largest economies continue to harden their positions, the global economic order faces one of its most serious challenges in decades — with repercussions likely to be felt well beyond trade alone.