Can China fight America alone?
The world’s two biggest economies begin an almighty trade clash
April 10th 2025
Victoria Harbour is Hong Kong’s most glamorous body of water. But Rambler Channel is where the free port’s work is done. The quays along its banks extend over more than 7km. Gantry cranes, rail-mounted or rubber-tyred, serve as many as 24 vessels at a time. Last year, the surrounding port handled over 10m of the standardised containers that carry goods across the world, parcelling globalisation up into metal boxes, in green, blue and red.
No bell or siren interrupted the port’s work at a minute past noon on April 9th—nothing to mark the moment when America’s devastating “reciprocal” tariffs came into effect. Containers kept circulating. Globalisation kept moving. A balding lorry driver reversed into position under a “reach stacker”, which hoisted his cargo into the air, like a weight-lifter jerking a barbell. The scene was deceptively anti-climactic, for a threshold had been crossed. Most goods leaving the port—and others like it across China—will now incur outlandish tariffs if they enter America, the world’s biggest market and, until now, its staunchest champion of global trade.
Read more of our coverage of Donald Trump’s tariffs
Trump’s incoherent trade policy will do lasting damage
The tariff madness of King Donald, explained
With tariffs paused, Republicans dodge a fight with Trump
The tariffs on China are so extravagantly high because it chose to retaliate, punch for punch, against what it calls America’s “economic bullying”. When President Donald Trump unveiled a 34% tariff on China on April 2nd, China matched it. When Mr Trump then raised it to 84%, China answered in kind. Then, hours after America’s tariff came into effect, Mr Trump took a third swing. He hiked the levy from 104% at noon (including an earlier penalty of 20% related to China’s role in fentanyl production) to 125% after dusk.
Even as he hit China, he retreated elsewhere. Reciprocal tariffs on other countries, linked to the size of their trade surpluses with America, will now not come into force for another 90 days. Countries will instead face a 10% tariff as they seek “bespoke” agreements with the president.
Mr Trump’s retreat earned a hearty “thank you” from America’s financial markets. The bond market, in particular, had been making people a little “queasy”, Mr Trump conceded. After his reprieve, stocks surged. The S&P 500 index ended the day up by 10%, leaving it 3% below its level at the end of April 1st, before the whole charade began (see chart).
Despite Mr Trump’s retreat, the tariffs that remain are still historic. They average over 25% across all trading partners, when weighted by America’s imports last year. The last-minute rise on China, which remains a huge trading partner, was more than enough to offset the last-minute reprieve offered to India, Japan, South Korea and Taiwan, all combined. As a consequence, America’s weighted overall tariff is still above the level it reached after the infamous Smoot-Hawley act of 1930. At the time that legislation passed, this newspaper described it as “the tragi-comic finale to one of the most amazing chapters in world tariff history”.
Today’s chapter, still more amazing and tragicomic, has not yet reached its finale. The 90 days earmarked for country-by-country negotiations is a blink of an eye in the geological timescale of trade talks. When the serious bargaining begins, some countries may not pucker up enough for Mr Trump’s liking. The president still seems intent on imposing tariffs on copper, lumber, pharmaceuticals and semiconductors. And on May 2nd parcels from China that are worth less than $800 will face onerous duties and documentation requirements, which they previously escaped because the revenue was often not worth the hassle of collecting it.
The world’s two biggest economies begin an almighty trade clash
April 10th 2025
Victoria Harbour is Hong Kong’s most glamorous body of water. But Rambler Channel is where the free port’s work is done. The quays along its banks extend over more than 7km. Gantry cranes, rail-mounted or rubber-tyred, serve as many as 24 vessels at a time. Last year, the surrounding port handled over 10m of the standardised containers that carry goods across the world, parcelling globalisation up into metal boxes, in green, blue and red.
No bell or siren interrupted the port’s work at a minute past noon on April 9th—nothing to mark the moment when America’s devastating “reciprocal” tariffs came into effect. Containers kept circulating. Globalisation kept moving. A balding lorry driver reversed into position under a “reach stacker”, which hoisted his cargo into the air, like a weight-lifter jerking a barbell. The scene was deceptively anti-climactic, for a threshold had been crossed. Most goods leaving the port—and others like it across China—will now incur outlandish tariffs if they enter America, the world’s biggest market and, until now, its staunchest champion of global trade.
Read more of our coverage of Donald Trump’s tariffs
Trump’s incoherent trade policy will do lasting damage
The tariff madness of King Donald, explained
With tariffs paused, Republicans dodge a fight with Trump
The tariffs on China are so extravagantly high because it chose to retaliate, punch for punch, against what it calls America’s “economic bullying”. When President Donald Trump unveiled a 34% tariff on China on April 2nd, China matched it. When Mr Trump then raised it to 84%, China answered in kind. Then, hours after America’s tariff came into effect, Mr Trump took a third swing. He hiked the levy from 104% at noon (including an earlier penalty of 20% related to China’s role in fentanyl production) to 125% after dusk.
Even as he hit China, he retreated elsewhere. Reciprocal tariffs on other countries, linked to the size of their trade surpluses with America, will now not come into force for another 90 days. Countries will instead face a 10% tariff as they seek “bespoke” agreements with the president.
Mr Trump’s retreat earned a hearty “thank you” from America’s financial markets. The bond market, in particular, had been making people a little “queasy”, Mr Trump conceded. After his reprieve, stocks surged. The S&P 500 index ended the day up by 10%, leaving it 3% below its level at the end of April 1st, before the whole charade began (see chart).
Despite Mr Trump’s retreat, the tariffs that remain are still historic. They average over 25% across all trading partners, when weighted by America’s imports last year. The last-minute rise on China, which remains a huge trading partner, was more than enough to offset the last-minute reprieve offered to India, Japan, South Korea and Taiwan, all combined. As a consequence, America’s weighted overall tariff is still above the level it reached after the infamous Smoot-Hawley act of 1930. At the time that legislation passed, this newspaper described it as “the tragi-comic finale to one of the most amazing chapters in world tariff history”.
Today’s chapter, still more amazing and tragicomic, has not yet reached its finale. The 90 days earmarked for country-by-country negotiations is a blink of an eye in the geological timescale of trade talks. When the serious bargaining begins, some countries may not pucker up enough for Mr Trump’s liking. The president still seems intent on imposing tariffs on copper, lumber, pharmaceuticals and semiconductors. And on May 2nd parcels from China that are worth less than $800 will face onerous duties and documentation requirements, which they previously escaped because the revenue was often not worth the hassle of collecting it.
