China faces massive 104% tariffs from today. Will Beijing back down?

The 'reciprocal tariff' imposed by US President Donald Trump on dozens of countries, including 104% on China, was set to take effect on Wednesday, the White House has informed.

White House press secretary Karoline Leavitt said he US will begin collecting steep levies on imported goods from China from Wednesday. The mammoth 104% tariff on China comes as Trump threatened to slap an additional 50% tariff on imports from China after Beijing imposed a retaliatory 34% import fee on American products. 

Trump also said in his Truth Social post that the U.S. would cease all negotiations with China. However, Beijing has vowed to "fight to the end".

In a phone conversation with European Commission President Ursula von der Leyen on Tuesday, Chinese Premier Li Qiang said the indiscriminate tariffs imposed by Trump was "a typical case of unilateralism, protectionism and economic bullying." 

As a trade war escalated between the countries, market experts believe it is unlikely that China would back down as it wouldn't want to look weak before the US. "It would be a mistake to think that China will back off and remove tariffs unilaterally," Alfredo Montufar-Helu, a senior advisor to the China Center at The Conference Board think tank, told the BBC. He added that budging from its stand would only give the US "leverage to the US to ask for more." 

"We've now reached an impasse that will likely lead to long-term economic pain," he added. 

China, they think, will come up with more retaliatory measures as the current profit margin for its exports is around 30 to 40 per cent. Dan Wang, China director at Eurasia Group, told South China Morning Post that even 35 per cent US tariffs would wipe out their profits. "Whether the tariff is 70 per cent or even 1,000 per cent makes little difference, as it essentially blocks China from trading directly with the US," he added.

Though the US market may eat into China's profits, the exporters will also find new markets by cutting back on the US. 

Alicia Garcia-Herrero, chief economist for the Asia-Pacific region at French investment bank Natixis, too believes that the extra tariff is not really an effective threat.  "The US market is already closed for Chinese products – at least directly from China to the US," she told South China Morning Post, adding that China's retaliation was a reaction to it being singled out. "Secondly, China has the leverage to retaliate."

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