Chinese dragon shows its teeth to fearless US: So what?

US Treasury Secretary Scott Bessent bluntly dismissed China’s retaliatory 84% tariff on American goods. 

Photo: commons.wikimedia.org by Chainwit., https://creativecommons.org/licenses/by/4.0/

US and China flags

"They’re the surplus country… Their exports to the US are five times our exports to China. So they can raise their tariffs. But so what?” Bessent said speaking on Fox Business.

In response to trade restrictions imposed by Donald Trump, China has raised tariffs on US goods by 50%, bringing the total duty on American imports to 84%. This move is seen as a retaliatory measure in the ongoing trade war initiated by Washington. The Chinese government's decision will take effect on April 10.

What's Going On with Tariffs Between the US and China

• February 1: Trump announced a 20% tariff on goods from China.
• April 2 ("Liberation Day"): Washington imposed an additional 34% tariff on Chinese imports, on top of existing ones.
• In response, Beijing levied 34% tariffs on all US goods.
• Trump demanded the removal of China's retaliatory tariff and threatened to raise tariffs by another 50%.
• He followed through on that threat. Since his inauguration, tariffs have totaled 104%.

Global Markets React with Declines

Markets around the world have responded to the escalating US-China trade conflict with notable downturns:

• Japan's Nikkei 225 closed down 3.78% on Wednesday, April 9.
• The TOPIX index dropped 3.4%, while Hong Kong's Hang Seng was down 0.73% in morning trading.

European markets also opened in the red:

• The Milan Stock Exchange saw its FTSE MIB index fall by over 3% shortly after opening.
• Frankfurt's DAX index, representing Germany's 40 largest companies, fell 2.5% at the start of trading.

JPMorgan Chase analysts warn of a growing risk of a global economic slowdown, raising their 2025 global recession forecast from 40% to 60% in light of the new tariffs.

Oil Prices Plummet, Gold Surges

Oil prices have fallen sharply, with Brent crude dropping below $60 per barrel for the first time in four years. By midday April 9, June Brent futures were down 6.7%, trading at $58.57, a level not seen since February 2021.

This drop in oil prices also dragged down the Russian stock market, which fell below 2,600 points — its lowest level since December 20, 2024.

Meanwhile, gold is benefitting from its safe-haven status. The spot price rose more than 2%, climbing back above $3,000 per ounce. Over the past year, gold prices have surged nearly 30%, driven largely by geopolitical tensions.

China adds six US companies to Unreliable Entity List

The Chinese Ministry of Commerce announced the addition of six American companies to its Unreliable Entity List. These companies — including Shield AI and Sierra Nevada — have come under fire due to their ties with Taiwan, whose sovereignty China does not recognize.

In addition, the ministry announced export controls on dual-use goods (civilian and military) for 12 American technology and manufacturing firms, including drone manufacturers and various communications companies:

• American Photonics
• Novotech Inc.
• Echodyne
• Marvin Engineering Company Inc.
• Exovera
• Teledyne Brown Engineering Inc.
• BRINC Drones Inc.
• SYNEXXUS Inc.
• Firestorm Labs Inc.
• Kratos Unmanned Aerial Systems Inc.
• Domo Tactical Communications
• Insitu Inc.

How Trade War Could Affect Russia

The exact impact on Russia remains uncertain. Central Bank head Elvira Nabiullina expressed concern, noting that tariff wars typically hurt oil prices the most:

"If these trade wars escalate, it usually leads to a decline in global trade, the world economy, and possibly demand for our energy exports," she said.

According to economist Mikhail Belyaev, the current tensions are strictly between the US and China, whereas Russia is not directly involved:

However, since a quarter of all global trade involves the US and China, indirect effects are likely. If tensions escalate, it could reduce global trade and slow economic growth, impacting demand for Russian energy exports.

Potential Upsides and Downsides for Russia

A global slowdown may decrease demand for raw materials, while rising competition may push prices down. Experts believe China could boost exports to Russia as it cuts off certain US markets.

What China can do next

Reportedly, Chinese authorities are expected to respond to the US tariff hikes in the following ways:

1. China will increase tariffs on American poultry and agricultural products.
2. American films will be banned from import into China — the Chinese market is the most profitable one for Hollywood.
3. China-US cooperation in combating narcotics will come to an end.
4. American companies in China will face issues related to their licenses and intellectual property rights.
5. Additional countermeasures in the trade sector will be introduced.

Details

A tariff is a duty (a tax) imposed by a national government, customs territory, or supranational union on imports (or, exceptionally, exports) of goods. Besides being a source of revenue, import duties can also be a form of regulation of foreign trade and policy that burden foreign products to encourage or safeguard domestic industry. 'Protective tariffs' are among the most widely used instruments of protectionism, along with import quotas and export quotas and other non-tariff barriers to trade. Tariffs can be fixed (a constant sum per unit of imported goods or a percentage of the price) or variable (the amount varies according to the price). Tariffs on imports are designed to raise the price of imported goods to discourage consumption. The intention is for citizens to buy local products instead, thereby stimulating their country's economy. Tariffs therefore provide an incentive to develop production and replace imports with domestic products. Tariffs are meant to reduce pressure from foreign competition and reduce the trade deficit. They have historically been justified as a means to protect infant industries and to allow import substitution industrialisation (industrializing a nation by replacing imported goods with domestic production). Tariffs may also be used to rectify artificially low prices for certain imported goods, due to 'dumping', export subsidies or currency manipulation. The effect is to raise the price of the goods in the destination country.