China’s retaliatory tariffs on US farm goods kick in as trade war escalates
Another front in Donald Trump’s trade wars opened up this morning, as China’s retaliatory tariffs on US imports kicked in.
The tariffs, announced last week, target about $21bn of agricultural imports from the US, in response to the extra 10% tariff imposed on China’s exports to the US by Trump.
Beijing’s move covers a wide range of commodities. Imports of US-grown chicken, wheat, corn and cotton will face an extra 15% tariff, the Chinese ministry said last week. Tariffs on sorghum, soybeans, pork, beef, seafood, fruit, vegetables and dairy products will be increased by 10%.
The move will make US products more expensive, and thus less competitive, in the Chinese market, which is likely to lead to more imports from other countries instead.
That is bad news for US farmers, and increases the risks that the US economy slows… or even drops into the dreaded recession.
Key events
Shipping firm Clarksons warns of rising uncertainties
Clarksons, the world’s biggest shipping services provider, has warned this morning that trade tensions and geopolitical conflict is hitting its sector.
Andi Case, chief executive officer of Clarksons, told shareholders that both freight rates and asset values have fallen this year, hitting its financial results in 2025.
Case explains:
For some years now we have started each new financial period with an uncertain geo-political outlook; 2025 has started with more uncertainty than most due to political change, ongoing regional conflicts, increased trade tensions, tariffs and sanctions, inflation and changing monetary policy across global economies.
As I write this report, the impact of these uncertainties is that freight rates and asset values have broadly fallen, which has meant that the value of spot business done to date is less than the same period last year.
Shares in Clarksons have tumbled by over 17% in early trading.
The company also reported record underlying pre-tax profits for 2024, and a 4% rise in earnings per share.
China’s stock markets have dropped today, as the double-whammy of trade war fears and deflation weighed on investors.
The CSI 300 index dropped by 0.4%, while in Hong Kong the Hang Seng index slid by 1.8%.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, calls it an “ugly early week selloff in China”, adding:
The week starts on a sharp negative note for the Chinese stocks, as the latest inflation update showed that consumer prices in China fell the most in more than a year….
Overall, the week is expected to bring more tariffs the Chinese tariffs on US agricultural and some Canadian products will start today, while the US steel and aluminium tariffs will be live from Wednesday.
The US-China trade war comes at a time when the Chinese economy is already struggling with weak inflation.
Consumer prices fell in February, pulling the CPI inflation rate down to -0.7% in February, the first negative reading since January 2024.
China’s deflationary pressures are “deepening”, says Stephen Innes, managing partner at SPI Asset Management, adding:
Monday kicks off with the same old deflationary drumbeat as China’s consumer inflation took a deeper dive than expected, slipping below zero for the first time in over a year. The data only reinforces what’s been clear for months—deflationary pressures remain firmly entrenched in the world’s second-largest economy.
The property sector remains stuck in the mud, domestic demand is weak, and despite a bounce in tech stocks, the broader wealth effect just isn’t filtering through to consumers.
China also announced new tariffs against Canada last weekend, creating an early headache for its next prime minister, Mark Carney.
Beijing is bringing in tariffs on over $2.6bn worth of Canadian agricultural and food products, in a retaliation against levies on China-made electric vehicles and steel and aluminium products which Ottawa introduced last October.
The commerce ministry said in a statement.
“Canada’s measures seriously violate World Trade Organization rules, constitute a typical act of protectionism and are discriminatory measures that severely harm China’s legitimate rights and interests.”
China will apply a 100% tariff to just over $1bn of Canadian rapeseed oil, oil cakes and pea imports, and a 25% duty on $1.6bn worth of Canadian aquatic products and pork.
China’s retaliatory tariffs on US farm goods kick in as trade war escalates
Another front in Donald Trump’s trade wars opened up this morning, as China’s retaliatory tariffs on US imports kicked in.
The tariffs, announced last week, target about $21bn of agricultural imports from the US, in response to the extra 10% tariff imposed on China’s exports to the US by Trump.
Beijing’s move covers a wide range of commodities. Imports of US-grown chicken, wheat, corn and cotton will face an extra 15% tariff, the Chinese ministry said last week. Tariffs on sorghum, soybeans, pork, beef, seafood, fruit, vegetables and dairy products will be increased by 10%.
The move will make US products more expensive, and thus less competitive, in the Chinese market, which is likely to lead to more imports from other countries instead.
That is bad news for US farmers, and increases the risks that the US economy slows… or even drops into the dreaded recession.
Introduction: Trump does not rule out recession
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
“If it isn’t hurting, it isn’t working,” was the cry of then-UK-chancellor John Major in 1989, as the British government tightened policy to fight inflation and drove the country into a recession.
But it could also be the catchphrase of the new American president, who appears relaxed about concerns he could trigger a US downturn.
Donald Trump has refused to say whether his trade policies means the US economy is facing a recession or higher inflation, arguing that a “period of transition” is taking place.
Instead, he told Fox News show Sunday Morning Futures:
“I hate to predict things like that. There is a period of transition, because what we’re doing is very big. We’re bringing wealth back to America. That’s a big thing.
And there are always periods of, it takes a little time. It takes a little time, but I think it should be great for us.”
The comments echo Trump’s line about how tariffs will cause ‘a little disturbance’, in his State of the Union speech last week.
Trump was speaking to Fox shortly after the latest US jobs report showed a pick-up in the unemployment rate in February, but also a rise in hiring – with payrolls up 151,000 in February.
That jobs data calmed some nerves about a looming “Trumpcession”, but economists remain concerned that slapping tariffs on major trading partners and slashing the Federal government will hurt growth.
Kyle Rodda, senior financial market analyst at Capital.com, says:
US President Trump implied he’s willing to tolerate weaker growth as the economy “transitions”, something that may sour investor sentiment further – with private sector job creation far outstripping modest public sector job creation.
The data added to the notion the US economy is moderating and its performance is converging with the rest of the world. The rates market, responding to increasingly disappointing data and downside surprises in activity, indicate that the Fed ought to re-starting cutting interest rates in July, if not potentially June.
