Trump tariffs are to blame Europe braces itself - now the flood of cheap goods from China is rolling in
China's exports to the USA are likely to collapse with the new tariffs. This is causing fear in the EU. It fears being flooded with cheap products.
No time? blue News summarizes for you
- From April 9, Chinese imports into the USA will be subject to tariffs averaging 70 percent.
- The punitive tariffs could trigger a global flood of exports from China and destabilize existing trade relations.
- China announces retaliatory measures, economists warn of global upheaval.
The USA is imposing massive punitive tariffs on imports from China - unleashing a new global trade conflict. President Donald Trump announced a drastic step in the Rose Garden of the White House on Wednesday: From April 9, Chinese products are to be subject to an average 70 percent tariff - a mix of new and existing levies.
Trump calls his latest blow to China's economy part of a "liberation day" for the USA. However, economic experts around the world see this as the start of an escalating trade war. The new tariffs affect large parts of Chinese exports - from electronics and toys to machinery and important components for US industry.
Global domino effect looms
The immediate consequences could be serious. The US imported around 440 billion dollars in goods from China in 2024 alone. If this sales market now largely disappears, Chinese exporters will look for new customers - which could lead to a global oversupply and massive price pressure.
"The real fireworks are yet to come," warns trade economist Michael Pettis from Peking University to theWall Street Journal. Countries such as Vietnam, South Korea and Japan, which are also heavily export-oriented, could also come under pressure - due to falling demand from the US and a displacement to other markets.
The EU is also arming itself against a possible flooding of the market with cheap Chinese goods. Brussels is preparing "a whole package of protective measures", an insider told theFinancial Times.
Many countries are already facing a veritable wave of exports from China. According to the Global Trade Alert organization, the country has been the target of almost 500 anti-dumping proceedings since 2018. The trend has recently accelerated: Brazil, Mexico, Canada, the United Kingdom and the EU took action against cheap Chinese imports - from steel to e-cars.
Xi focuses on exports instead of consumption
China's economy is struggling with sluggish domestic demand, a real estate crisis and falling consumption. President Xi Jinping is therefore trying to boost growth via export markets through massive investment in industry - a risky course that is now meeting with massive resistance.
"There is simply no market that can absorb China's export volume if the US disappears," says Brad Setser from the US think tank Council on Foreign Relations in the Wall Street Journal. In the toys and electronics sector alone, Chinese suppliers often account for the majority of US imports - alternatives are rare.
Economists are calling for China to finally invest more in domestic consumption in order to reduce its dependence on exports. Although Beijing has already announced economic stimulus measures, further steps are likely to be necessary in view of Washington's tariff crackdown: Interest rate cuts, more government spending and initiatives to boost consumer confidence are considered options.
According to Citi chief economist Yu Xiangrong, the new tariffs could reduce China's growth by up to one percentage point this year. This is probably one of the reasons why China reacted on Friday - and announced counter-tariffs of 34%. In the past, China had already imposed tariffs on US agricultural products such as soybeans, beef and grain - a blacklist of US companies was also introduced.
Now it is likely to be a question of who gives in first. One economist tells the WSJ: "The trade war is now definitely in full swing."
