Trump tariffs: China slaps new 125% levy on US goods

A monthly study carried out by the University of Michigan showed that US consumers have soured on the economy, following Trump's tariff announcements.

The Consumer Sentiment Index on Friday fell sharply by 6.2 points month-on-month to 50.8 points.

"Sentiment has now lost more than 30% since December 2024 amid growing worries about trade war developments that have oscillated over the course of the year," said Surveys of Consumers Director Joanne Hsu.

Inflation expectations among Americans surged to the highest level since 1981.The survey also showed the share of US consumers expecting unemployment to rise reached the highest level since 2009, when the economy was hit by the Great Recession.

Although the decline in sentiment was more pronounced among Democrats and Independents, Republicans also had lower consumer confidence, as researchers said that the negative mood was "pervasive and unanimous" across age, income, education, geographic region and political party affiliation.

The data was collected between March 25 and April 8, before Trump's introduced a 90-day delay on elevated tariffs for many countries. For now, a baseline 10% tariff has been imposed by the US on goods from most nations, with China being hit by a 145% tariff.     

The president of the African Development Bank (AfDB), Akinwumi Adesina, said on Friday that an onslaught of US tariffs would send "shock waves" through African economies.

In a speech at the National Open University of Nigeria, Adeisna warned of reduced trade and higher debt-servicing costs on countries across the continent.

"Inflation will increase as costs of imported goods rise and currencies devalue against the US dollar," Adesina said. "The cost of servicing debt as a share of government revenue will rise, as expected revenues decline," he added.

If Trump restarts the tariffs after the 90 day pause, most African countries would be subject to a baseline 10%, but 47 African countries at risk of even higher tariffs.

The AfDB chief said this will cause local currencies to weaken on the back of reduced foreign exchange earnings.

Additionally, Adesina warned that Europe and Asia "will buy less goods from Africa" amid the global shocks.

European stocks finished the week with a downturn, after a week of volatility in the market following Trump's tariff delay and increasing trade war with China.

The pan-European STOXX 600 edged 0.1% lower, after China raised tariffs on US goods to 125% from 84%. The index briefly hit a near 1-1/2-year low earlier this week, then surged on Thursday after the tariff pause.

Both the benchmark and several regional indexes had their strongest session since 2022.

Friday's figures, however, represent a straight week in the red for the STOXX 600.

Meanwhile, the regional indexes had mixed results. Germany's DAX fell by 1%, while the UK's FTSE 100 went up 0.6%.

ECB President Christine Lagarde said that despite the volatility, euro zone financial markets are still functioning well.

US President Donald Trump is "optimistic" about striking a trade deal with China, the White House said Friday.

"The president has made it very clear he's open to a deal with China," White House Press Secretary Karoline Leavitt said, adding, "He's optimistic."

China said Friday it will raise tariffs on US goods to 125%, up from the 84% levy announced on Wednesday. 

"If China continues to retaliate, it's not good for China," Leavitt said.

Earlier this week Trump paused import taxes for other countries, but he raised tariffs on China and they now total 145%.

US President Donald Trump has struck a confident tone about his tariff policy, despite it triggering worries about the US economy with the dollar falling and stock markets in turmoil.

"We are doing really well on our tariff policy. Very exciting for America, and the World!!! It is moving along quickly," Trump said on social media.

His remarks came as stocks on Wall Street opened with little change on Friday.

Chinese President Xi Jinping met Spanish Prime Minister Pedro Sanchez in Beijing on Friday.

During their meeting, Xi said that China and the European Union should join forces to resist the trade barriers imposed by the Trump administration.

"China and Europe should fulfill their international responsibilities... and jointly resist unilateral bullying practices," Xi was quoted by Chinese state media as saying.
 
China and Spain also signed two agricultural trade agreements covering pork and cherries.

"Both Spain and Europe have a significant trade deficit with China that we must work to rectify," Sanchez told a news conference after talks with Xi, adding "we must not let trade tensions stand in the way of the potential growth of the relationship between China and Spain and between China and the EU."

European Central Bank (ECB) chief Christine Lagarde is prepared to respond if US President Donald Trump's tariff blitz threatens financial stability.

The ECB "is always ready to use the instruments that it has available," Lagarde said in Warsaw, after talks with eurozone finance ministers on how Europe can prevent a trade war or protect its economy if negotiations with Washington fail.

"What we have observed recently, of course, is a degree of volatility," Lagarde told reporters.

"But in Europe, and in the euro area in particular, we have observed that market infrastructures and functioning of markets, including the bond markets, is functioning in an orderly fashion," Lagarde said.

The export-driven German economy will feel the impact of a "massive escalation" in the trade dispute between China and the United States, Berlin has said.

Germany is called for a diplomatic solution to the escalating trade war after China retaliated against massive US tariffs thumping goods from the US with an extra 125% in duties.

The dispute was not only affecting the US and China but also "having an impact on a globalized world economy", government spokesman Steffen Hebestreit said. 

He added that "a negotiated solution must be found that works well for all sides."

The German Economic Institute IW's use of a simulation tool show the huge tariffs currently in place between the US and China alone would reduce German GDP by an average of 1.1% annually in the years 2025 to 2028, compared with a scenario without tariffs.

"We must not feel safe during the tariff pause in the US-European trade dispute," said IW trade expert Galina Kolev-Schaefer. 

"In their search for new sales markets, Chinese products could now flood the rest of the world," warned Kolev-Schaefer. "This will make German exports significantly more difficult." Global uncertainty is also continuing to grow, and an end to the trade war is not yet in sight.

China is the US's third-largest export market with  $143.55 billion worth of  exports in 2024,  with electrical and electronic equipment in the top category of products at $15.2 billion.

Mineral fuels and gases, oils and distillation products came in second at $14.73 billion.

Agricultural products also figure highly, especially soybeans which alone bring in more than $12.7 billion into the US economy.

Machinery, including nuclear reactors and boilers fetched nearly $12.9 billion  with aircraft and spacecraft netting $11.5 billion.

Also in the mix were optical and medical apparatus, pharmaceutical products, plastics and other various chemicals.

By state, Texas, California and Louisiana were the top US exporters to China in 2023.

The dollar tumbled on Friday morning to its lowest level against the euro since February 2022 as the trade war between the US States and China deepens

The greenback dipped almost 2% to $1.1424 and also fell around one percent against the UK pound.

It also tanked against the yen and the Swiss franc as investors dropped what is usually considered a key safe haven currency.

Ahead of the latest drop, Michael Krautzberger at Allianz Global Investors  said the dollar's decline was "a surprising indicator, as the dollar is typically considered a safe-haven currency that performs well when risk appetite deteriorates."

"A decline in the dollar could be a sign that markets are questioning its status as a global reserve currency."

Beijing has claimed that the White House's decision to freeze tariffs on other countries came partly after "pressure from China," as it announced another round of retaliatory levies on US goods.

"Under pressure from China and other parties, the United States has temporarily suspended the imposition of high reciprocal tariffs on some trading partners," a Commerce Ministry spokesperson said. "This is only a small symbolic step."

Beijing has said tariffs imposed by the United States "make no economic sense" and that it has filed a new complaint with the World Trade Organization (WTO). 

"The US alternately raising abnormally high tariffs on China has become a numbers game, which has no practical economic significance, and will become a joke in the history of the world economy," a Commerce Ministry spokesman said in a statement announcing the countermeasure.

"However, if the US insists on continuing to substantially infringe on China's interests, China will resolutely counter and fight to the end."

Meanwhile, China's mission to the World Trade Organization said on Friday it had lodged an additional complaint to the trade body over US tariffs.

"On 10 April, the United States issued the Executive Order, announcing a further increase of the so-called 'reciprocal tariff' on Chinese products. China filed a WTO complaint against [the] United States’ latest tariff measures," the mission said, citing a Commerce Ministry spokesperson.

In a tit-for-tat move, China said it would impose a 125% tariff on US goods starting Saturday, up from the previous 84%, the Finance Ministry announced on Friday.

"The US's imposition of abnormally high tariffs on China seriously violates international trade rules, basic economic laws and common sense," Beijing's State Council Tariff Commission said in a Finance Ministry statement, adding that the new levy comes into effect on Saturday.

The move follows US President Donald Trump's decision to raise duties on Chinese goods to 145%, ratcheting up a trade war that threatens to upend global supply chains.

The White House has kept the pressure on the world's second-largest economy and second-biggest provider of US imports by singling it out for an additional tariff increase, having suspended most of the so-called "reciprocal" duties imposed on dozens of other countries.

Richard Painter, a former White House ethics lawyer, has told DW that an investigation should be opened to ascertain "who knew what the president's plan was on tariffs and if anybody made trades based on that information."

On Wednesday, Donald Trump paused the massive tariffs he had just placed on dozens of countries. Stocks on Wall Street rose sharply following the announcement.

Earlier in the day, before the announcement, Trump had posted on Truth Social, "THIS IS A GREAT TIME TO BUY!!!"

"The president has just created an appearance of market manipulation and that there might be insider trading when he's talking about buying and selling stocks at the same time as he's talking about US trade policy," Painter said.

Asked whether it was wrong or maybe even illegal, Painter pointed out that it was unprecedented.

"We have never had a president before weigh in on where to buy or sell stocks in particular. We've never had this happen when the administration is about to announce such significant changes to economic policies," Painter said.

He added, however, that there has been a problem of conflicts of interest in US politics for a long time, with elected officials thinking "they can trade on the stock market while making decisions that affect the stock market."

"This is one of the reasons so many people distrust our government," he added.

Painter also said Trump should "avoid an economic crisis and an all-out trade war, which will result in an economic crisis."
 

Asian markets dropped on Friday, as a historic week of volatility continues amid uncertainty caused by Donald Trump's threat of tariffs on most of the US' trading partners, and a looming US trade war with China. 

The market jitters dragged Japan's Nikkei 225 index down around 5% at opening, giving back some of its gains after rallying over 9% on Thursday following Trump's tariff turnaround. 

Stock markets in South Korea and Australia were also down by 1.6% and 2.1% respectively, while Sydney, Singapore, Taipei, Wellington, Jakarta and Manila were also in the red on Friday morning.