Hours after President Donald Trump’s sweeping 104% tariff on Chinese imports took effect, Beijing fired back with an 84% levy of its own on American goods—more than doubling its previous rate.
Markets didn’t wait to digest it. Wall Street futures plunged overnight. The Dow dropped nearly 2%. S&P 500 and Nasdaq futures weren’t spared either, falling 1.72% and 1.45% respectively.
Europe and Asia took hits too, with London’s FTSE and Japan’s Nikkei both seeing steep losses. Safe havens? Not anymore. Even U.S. government bonds faced a sell-off.
The Chinese Finance Ministry confirmed the tariff hike late Wednesday, saying it would take effect at 12:01 p.m. Thursday. From that point on, American imports into China would face an 84% tariff—up from 34%.
“The tariff escalation against China by the United States simply piles mistakes on top of mistakes,” Beijing said. “It severely infringes on China’s legitimate rights and interests.”
This all began with a deadline. Trump demanded China reverse its own tariff by Tuesday. When that didn’t happen, the White House moved quickly. Press Secretary Karoline Leavitt spelt it out: “The president, when America is punched, he punches back harder, that’s why there will be 104% tariffs going into effect on China tonight at midnight.”
She also dangled a small olive branch. “The president would be gracious if President Xi wants to make a deal,” she added. But if there’s an opening for diplomacy, it’s getting harder to find.
For now, both Trump and China are digging in regarding the tariff changes. China’s Commerce Ministry blasted Washington’s move as “unilateral bullying” and “blackmail,” while warning of further countermeasures.
The Ministry said the 104% tariff was groundless and a violation of international norms. Its response, it said, was to protect China’s sovereignty and development.
China’s retaliation didn’t stop at tariffs. Six U.S. tech firms—including Shield AI and Sierra Nevada Corp—have now been sanctioned. Beijing accused them of selling weapons to Taiwan and collaborating on military projects with the island. That’s a sharp escalation, and not just economic.
Trump, for his part, seems unfazed. At a press event with Israeli Prime Minister Netanyahu, he was asked whether the U.S. might ease off on its global tariff stance. His answer: “We’re not looking at that.”
In the background, over $5 trillion in U.S. market value has been wiped out since Trump’s new tariff policy was revealed. The S&P 500 is down nearly 20% from its peak, technically placing it in bear territory. Oil prices have also crashed, reaching lows not seen since 2021.
The economic pressure is real. But politically, Trump appears to be leaning into the chaos. He posted on social media urging American companies to bring their manufacturing home: “Don’t wait, do it now!”
China, however, has drawn a line. “We will fight to the end,” a statement from state-run Xinhua declared earlier this week. And now, it’s walking that talk.
What’s next? Neither side is backing down. Both have shown they’re willing to take the pain. But then, businesses and consumers are caught in the middle.
