China has announced a new retaliatory tariff of 50 percent on imports from the United States, further escalating the ongoing trade conflict between the two largest economies globally. The finance ministry in Beijing revealed on Wednesday that these new duties would be added to the previously declared 34 percent tariffs on U.S. imports and would take effect on Thursday. This new measure raises the total Chinese tariffs on American imports introduced during the Trump administration to 104 percent, aligning with the level imposed on Beijing by the U.S. president since his tenure began.
Earlier, the Trump administration had imposed an initial reciprocal duty of 34 percent on China, which was subsequently increased by 50 percent. The announcement contributed to heightened market volatility on Wednesday, following the implementation of President Trump’s extensive tariffs, resulting in a sell-off of government bonds and stocks.
U.S. Treasury markets faced significant impacts, with the 10-year yield—a global borrowing cost benchmark—rising to 4.51 percent before settling at 4.38 percent, an increase of 0.12 percentage points from the previous day, up from just below 3.9 percent on Monday. Similarly, the 10-year Japanese government bond yield surged as high as 1.37 percent before declining to 1.27 percent, remaining relatively unchanged for the day, with bond yields moving inversely to their prices.
Stock markets experienced renewed stress, with futures contracts tracking the S&P 500 and the Nasdaq Composite falling by 1.2 percent and 1 percent, respectively, two hours before the New York market opening. The Stoxx Europe 600 decreased by 4 percent, the FTSE 100 dropped by 3.4 percent, and Germany’s Dax fell by 3.5 percent.
Experts and economists have expressed concerns that Trump’s tariffs could heighten the recession risk in the United States, the world’s largest economy, and possibly trigger a new wave of inflation. Ed Yardeni from Yardeni Associates noted that the sell-off in Treasuries, traditionally viewed as a safe haven during periods of market stress, indicates the possibility that the “Trump administration may be playing with liquid nitro.”
