US President Donald Trump has once again imposed a 10% import tariff on Chinese goods, on top of a previous increase a month ago. The sudden announcement, which was shared as usual via Truth Social, comes into effect on March 4.
The Chinese government responded immediately, warning of retaliatory measures. A spokesperson for the Ministry of Commerce stressed that Beijing will take “all necessary steps” to protect its economy, according to a report by Bloomberg News.
Hong Kong stocks fell by 3.9%, the biggest loss since October. The CSI 300 Index dropped 1.9%, ending a month-long winning streak. The yuan briefly fell, but recovered slightly after intervention by the People’s Bank of China.
Investors retreated to safer assets, as rising borrowing costs and liquidity issues put economic stability under pressure.
The timing of the tariffs comes just before the National People’s Congress, where Xi Jinping will unveil his economic plans for 2025. Despite tensions between China and the US, diplomatic talks continue in the background.
China traditionally responds quickly to US tariffs. Previous measures included additional levies, an antitrust investigation into Google, and export restrictions on critical minerals. Major US companies were blacklisted, and economists expect a similar counter-reaction.
A possible weapon is the suspension of tariff exemptions, which expire today. Meanwhile, the US is tightening restrictions, with stricter investment rules and higher shipping costs.
The trade war affects both economies: import costs are rising and the Chinese financial sector is struggling with liquidity issues, causing borrowing costs to continue to rise.
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