China hits back with 84% levies, triggers costly ‘game of chicken’

China will impose 84% tariffs on US goods from Thursday, up from the 34% previously announced, its finance ministry said on Wednesday, firing the latest salvo in a global trade war sparked by US President Donald Trump.

Trump’s “reciprocal” tariffs on dozens of countries took effect earlier on Wednesday, including massive 104% duties on Chinese goods. The European Union is also preparing its own retaliatory measures for later on Wednesday.

Trump’s punishing tariffs — which he says aim to end US trade deficits with many countries — have upended a global trading order in place for decades, raising fears of recession and wiping trillions of dollars off the market value of major firms.

Global markets took a pummelling on Wednesday as Trump’s eye-watering 104% tariffs on China came into effect, and a savage selloff in US bonds sparked fears that foreign funds were fleeing US assets.

Markets fell further after China retaliated.

European shares extended their losses. Oil prices plunged to even deeper four-year lows and US stock index futures fell sharply.

As it announced its new tariffs, China’s finance ministry said in a statement, “The US escalation of tariffs on China is a mistake on top of a mistake, which seriously infringes on China’s legitimate rights.”

“Both are stuck in an expensive game of chicken,” said Ting Lu, an economist.

The World Trade Organisation estimated the US- China trade tensions could cut the trade of goods between two economies by as much as 80%.

“This tit-for-tat approach carries wider implications that could severely damage the global economic outlook," it said.

World