Folks, buckle up! On Wednesday, Donald Trump didn’t hold back, announcing hefty 34% tariffs on goods coming in from China. He called these duties “discounted” reciprocal tariffs, even though China had been trying to avoid these higher charges. This big news dropped on what Trump enthusiastically called “Liberation Day,” when he also rolled out a broader plan to slap baseline tariffs of 10% on pretty much every country, with even higher rates for some specifically targeted nations.

Trump explained this new tariff strategy as essentially making other countries pay “for the privilege” of selling their stuff in the American market. He made a point of saying that the U.S. *could* have matched China’s tariffs dollar for dollar, but his administration decided to take a slightly less aggressive approach to show, as he put it, some restraint. “The tariffs will be not a full reciprocal,” he stated. “I could have done that yes, it would have been tough for a lot of countries. We didn’t want to do that.”

In his speech, Trump really drove home the point that he believes China hasn’t been playing fair when it comes to giving American goods and services access to their market. He questioned the trade dynamic, saying, “They charge us, we charge them less, so how can anybody be upset?” He also reminisced about a stronger economic past for the U.S., suggesting things have taken a downturn lately. “We had a great country four years ago in terms of the economics, and we were doubling up on China. Nobody was going to catch us but so much of it slipped away in the last four years under Biden,” he claimed.

Trump went on to recall how, seven years prior, the U.S. was raking in “hundreds and billions of dollars” in tariffs from China. He asserted that Chinese leaders understood Washington’s need to take a firmer stance. “President Xi, he understood. They all understand that we are gonna have to go through tough love maybe. They are ripping us off, and they understood it,” he declared.

China has taken steps to restrict local companies from investing in the US

Now, get this: according to a report from Bloomberg, China’s been making moves of its own. Their National Development and Reform Commission has reportedly told its branches to put a halt on registrations and approvals for Chinese companies looking to invest in the U.S. When exactly this started and how long it will last is still up in the air.

It’s worth noting that China has had some controls on overseas investments for a while, often citing national security and worries about money leaving the country. But this new clampdown is happening right as trade tensions are escalating between the world’s two biggest economies.

To give you some numbers, official stats say Chinese investments into the U.S. totaled $6.9 billion in 2023. It’s not immediately clear if this new restriction will mess with existing investments or major financial holdings, like China’s purchases of U.S. Treasury bonds.

While this seems primarily aimed at corporate investment in the U.S., it definitely throws another curveball into the already complicated world of global trade. Companies are now likely scrambling to figure out how to shift production or find other ways around these new trade barriers.

All of this just adds fuel to the fire in the already strained relationship between China and the U.S., especially hot on the heels of the freshly announced 34% tariffs.

China couldn’t dodge US tariffs

In what seemed like a last-ditch effort to cool things down, China’s official newspaper, the People’s Daily, published an article highlighting all the good things that have come to U.S. farmers and tech companies from trading with China.

This piece, written under the pen name “Zhong Sheng,” which basically means “Voice of China,” pointed out how U.S. agricultural imports have been a boon for American farmers and have helped meet China’s own needs.

Interestingly, this commentary landed just before Trump’s tariff announcement, setting the stage for his global tariff plan finalized on April 2nd. Bloomberg reported that some people saw this article as Beijing’s subtle reminder to Washington about the economic wins from working together.

John Gong, who used to advise China’s Commerce Ministry and is now a professor at the University of International Business and Economics in Beijing, put it this way: “This article appears to be Beijing’s last effort to avert Trump’s tariffs against China in the hope of changing his mind.”

China has hinted towards further retaliation in trade tariffs

Earlier in the week, on Monday, another article showcased how China’s massive market and production power have been a big help to major American players like Tesla and Apple.

While this piece argued for keeping things cooperative and mutually beneficial, it also hinted at areas where China might strike back.

Let’s not forget, Beijing has already taken aim at U.S. agricultural and energy products in response to the 20% blanket tariffs Trump had slapped on Chinese goods earlier in the year. They also launched investigations into Google (Alphabet Inc.) and put U.S. gene-sequencing company Illumina Inc. on a blacklist of companies getting extra scrutiny.

On the diplomacy front, China hasn’t been quiet either. Their top diplomat has been vocal in criticizing the tariffs, urging Trump to scrap them. Foreign Minister Wang Yi, speaking to Russian media outlet RIA Novosti on Tuesday, argued that the U.S. duties were citing China’s supposed role in the fentanyl crisis without real evidence. “If the US side persists in exerting pressure and even continues to engage in blackmail, China will resolutely counteract it,” Wang declared.

Experts are warning that these moves could just be the beginning of a long-haul trade battle, with both countries looking ready to ramp things up even further.

Some are predicting China will double down on protecting its own industries and keeping a tighter grip on where money flows. On the flip side, others think Washington might pile on even more duties or get tougher on enforcing trade rules against products Trump deems unfairly traded.

For now, the 34% reciprocal tariff is a significant number, even though Trump maintains it’s actually less than what he could have imposed to really match China’s rates.

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Source: cryptopolitan.com