Beijing targets US goods, firms, and critical minerals in retaliation for Trump’s latest levies
China has announced sweeping retaliatory measures in response to US President Donald Trump’s latest escalation in the global trade war, unveiling a 34% tariff on all US imports and launching export controls targeting rare earth minerals and sensitive technologies.
The new measures will take effect on April 10, China’s Ministry of Finance said on Friday, following Washington’s own decision to impose a 34% reciprocal tariff on all Chinese goods. That move brought total US tariffs on Chinese products to 54%, combining earlier tranches imposed since Trump’s return to office in January.
“This practice of the US is not in line with international trade rules, seriously undermines China’s legitimate rights and interests, and is a typical unilateral bullying practice,” China’s State Council Tariff Commission said in a statement.
The response marks China’s most aggressive trade retaliation in years, aimed squarely at critical sectors of the US economy. Chinese authorities have:
- Imposed a 34% blanket tariff on all US imports.
- Added 11 US firms, including drone makers such as Skydio and BRINC Drones, to its “unreliable entities list” for undermining China’s sovereignty through arms sales to Taiwan.
- Launched export controls on seven rare earth minerals—samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium—crucial for electronics, electric vehicles, medical devices, and defence systems.
- Banned 16 US companies from accessing Chinese dual-use items, citing national security concerns.
- Opened an anti-dumping probe into CT X-ray tubes imported from the US and India.
- Suspended imports from several US agricultural exporters, alleging contamination in sorghum and poultry shipments.
- Filed a formal WTO complaint challenging the legality of the US tariffs.
The trade standoff is rapidly unravelling decades of deepening economic ties between the world’s two largest economies, threatening to upend supply chains and unsettle global markets.
“A significant escalation”
“This is a significant escalation of China’s response,” wrote Leah Fahy, China economist at Capital Economics. “Xi Jinping appears to feel that China’s economy is strong enough to withstand whatever Trump throws at it next.”
Beijing’s latest moves come during the Tomb Sweeping Festival, a national holiday, but also reflect China’s readiness to meet Trump’s tariff-for-tariff approach head-on. The timing of the announcement—Friday evening local time—may have been calculated to limit domestic disruption while sending a clear signal abroad.
US President Trump responded with typical defiance, posting on Truth Social:
“CHINA PLAYED IT WRONG, THEY PANICKED – THE ONE THING THEY CANNOT AFFORD TO DO!”
Yet analysts suggest China’s moves are carefully calibrated to target politically sensitive US sectors—agriculture, industrial goods, technology, and defence—without crippling its own economy. “This is not blind retaliation, but a clear recalibration,” said Craig Singleton of the Foundation for Defense of Democracies.
Impact on markets and economies
Global markets plunged in response to China’s announcement. On Friday:
- The Dow Jones Industrial Average fell over 1,000 points, or 2.7%.
- The S&P 500 dropped more than 3%.
- The Nasdaq Composite lost 3.5%.
- European markets also slumped, with the Stoxx 600 index down 4.5%, led by a 9.5% crash in the banking sector.
The shockwaves extended to Asia. Japan’s Prime Minister called the tariffs a “national crisis”, as the Tokyo stock market endured its worst week in years. US tech stocks with supply chain exposure to China, such as Apple and Nvidia, were particularly hard-hit.
While US Secretary of State Marco Rubio dismissed talk of economic collapse, he acknowledged that “markets are reacting to a dramatic change in the global order.”
Chinese economists, meanwhile, warned of substantial economic headwinds. Larry Hu, chief China economist at Macquarie Group, estimated the latest measures could shave up to 2.5 percentage points off China’s GDP growth in 2025, primarily through reduced exports, rerouted supply chains, and weakened global demand.
To reach its 5% annual growth target, China may need to step up domestic stimulus to offset the external shock.
Strategic pressure points
China’s retaliation reflects a multi-pronged strategy that not only mirrors US tariffs but also leverages Beijing’s control over global supply chains:
- The rare earth export restrictions target sectors like electric vehicles, medical imaging, and military technology where the US is reliant on Chinese materials.
- The anti-dumping probe into medical CT equipment and the suspension of key agricultural imports hit Trump’s political base in Republican-leaning farming states.
- The addition of US drone and logistics firms to export control and “unreliable” lists threatens American access to China’s US$15bn drone-parts market and strengthens the global position of DJI, China’s dominant drone maker.
China’s Commerce Ministry said the actions were necessary to “safeguard national security and development interests” and to “fulfil international obligations such as non-proliferation.”
The broader message is one of strategic defiance. As Xi Jinping and the Politburo planted trees on the day the US tariffs were announced, Beijing signalled it would not be drawn into panic but would pursue a long game of economic resilience and diversification.
