China has officially fired back. On Friday, Beijing announced a 34% tariff on all U.S. imports, effective April 10, matching President Trump’s latest escalation and pushing total duties on Chinese goods entering the U.S. to over 54%. In a broader retaliatory sweep, China also added 11 American companies to its unreliable entities list and imposed export controls on key rare earth elements like samarium, gadolinium, and terbiumminerals critical to EVs, semiconductors, and defense. The new restrictions mark one of China’s most forceful trade responses in recent memory and set the stage for a deeper, more unpredictable U.S.-China standoff.
Global markets responded immediately. Dow (DIA) dropped 2.5%, while the S&P 500 (SPY) and Nasdaq (NASDAQ:QQQ) declined by 2.6% and 2.8%, respectively at 9.50am today. European and UK equities also posted their worst single-day drops in years. Tesla (NASDAQ:TSLA), whose EV supply chain depends heavily on Chinese rare earths, plunged 5.8%. Despite U.S. Secretary of State Marco Rubio’s comment that markets will adjust, investor sentiment reflected growing concern that this is more than a tariff fightit’s a structural breakdown in global trade mechanics.
Economists are now recalibrating growth forecasts. Macquarie’s Larry Hu estimates China could lose up to 2.5 percentage points of GDP growth in 2025 due to weakening U.S. demand and disruptions in global supply chains. The timing is especially difficult for Beijing, which has been trying to stimulate domestic consumption. For U.S. and multinational companies, the implications are significant. With China restricting outbound materials and Washington targeting inbound products, business leaders may be forced to rethink sourcing, pricing, and investment strategies across sectors. The message for investors: the rules are changingand fast.
This article first appeared on GuruFocus.
