The all-out trade war is here. China unleashed its heavy artillery this Friday to respond to US President Donald Trump's previous tariff blow, with a forceful rebuttal across various sectors. The two major economic powers on the planet, whose value chains are deeply intertwined and total trade amounts to more than $580 billion (€525 billion) annually, thus enter a new level of confrontation whose effects on the rest of the planet are unpredictable.

Beijing has announced, first, that it will impose tariffs of 34% on all products imported from the United States, in response to the 34% tariff wall also erected the day before by Donald Trump (which reaches 54% if the 20% tariffs previously imposed on Chinese products are added). But the Chinese onslaught does not stop with the imposition of new taxes. The battery of trade shots, which was announced on Friday afternoon (local time) through statements from various ministries, also includes restrictions on the export of items related to seven categories of rare earths (such as samarium, terbium, and gadolinium) due to their potential dual civil and military uses. These elements, whose production is dominated by China, are key in the technological race and one of Trump's obsessions, who has shown interest in obtaining them from Ukraine and Greenland.

Beijing has also filed a complaint against the US measures with the World Trade Organization (WTO) dispute settlement mechanism; it has approved the inclusion of 11 US companies on the"unreliable entities" list—allowing communist authorities to impose punitive measures—and has restricted exports of Chinese products to 16 other US companies linked to the defense and security sectors, again due to their potential dual civilian and military uses.

The retaliation was unleashed on what was supposed to be a peaceful day in the Chinese capital for the celebration of Qingming, or Tomb-Sweeping Day, a traditional Chinese holiday in which people honor the dead and pay homage to their ancestors.

"The United States' actions violate international trade rules, seriously undermine China's legitimate rights and interests, and are a prime example of unilateral intimidation," reads the brief statement from the Chinese Ministry of Finance, which decrees the imposition of 34%"additional" tariffs on US products based on the current tariff rate (which varies by sector and product).

The 34% tariffs approved by Washington last Wednesday are also in addition to the 20% tariff the US president had previously decreed for Chinese products, bringing the tariff to 54% for China, one of the highest approved by the US administration on the bombastically so-called"Liberation Day."

Beijing had urged the Trump administration on Thursday to withdraw its new tariffs "immediately" and resolve the dispute through dialogue, reserving the right to take measures to safeguard its rights and interests. In a statement, the Ministry of Commerce denounced Washington's"ignoring" the balances reached in negotiations over years and asserted that the United States has also benefited from international trade. It also criticized Trump's new tariffs for being based on"subjective and unilateral assessments." China believes these measures endanger the global economy and the stability of production and supply chains."There are no winners in a trade war," the statement concluded. Faced with silence from the White House in the following hours, China finalized its retaliation on Friday.

Furthermore, the executive order signed by Trump on Wednesday included sealing one of the loopholes through which a large portion of Chinese products enter the United States. Until now, imports under $800 benefited from the so-called de minimis exemption, meaning they were exempt from paying customs duties. This option has been used by Chinese e-commerce giants such as Temu, Shein, and Alibaba to ship goods to their American customers. Starting May 2, these products will also be taxed at 54%.

In recent weeks, China's responses to Trump's announced measures have been measured and limited, which has been interpreted as a willingness to engage in dialogue and negotiation on the part of the Asian giant. Following the previous two consecutive 10% tariff increases signed by the US president, China retaliated with tariffs of between 10% and 15% on numerous US products, from agri-food products to energy and manufacturing with an added value of around $35 billion (almost €32 billion), while US taxes affected all products imported from China without distinction, with a value of around $440 billion (around €405 billion).

In addition, Beijing had already restricted exports to 15 US companies linked to defense and security, added another handful of companies to the unreliable entities list, and announced an antitrust investigation into Google. It had also restricted exports of critical minerals—a market it dominates—in the production of technology and weapons. This Friday, it took another step forward in response to Trump's attack.

“A great time to get rich”

US President Donald Trump has responded to China's retaliation in a post on Truth, his social media platform."CHINA MADE A MISTAKE, THEY PANIC, THE ONE THING THEY CAN'T AFFORD!" he wrote.

The day before, Trump had expressed his willingness to lower tariffs on China in exchange for China allowing ByteDance to sell a stake in its popular video-sharing platform TikTok. When asked if he was willing to make deals with other countries, he replied: “Well, it depends. If somebody tells us they’re going to give us something phenomenal, as long as they give us something that’s good. Take TikTok, for example. We have a situation with TikTok where China will probably say we’ll pass a deal, but you do something about the tariffs. Tariffs give us tremendous bargaining power.” For his part, Commerce Secretary Howard Lutnick said in a television interview that all Xi Jinping needs to do to get the additional 20% tariffs lifted is to call Trump and commit to halting the export of chemicals used to manufacture fentanyl.

Trump contradicted himself this Friday. If investors believe tariffs are negotiable and can be lowered, they will have less incentive to invest in new factories in the United States. That's why, one day after opening negotiations, he wrote:"TO THE MANY INVESTORS WHO COME TO THE UNITED STATES AND INVEST MASSIVE AMOUNTS OF MONEY, MY POLICIES WILL NEVER CHANGE. IT'S A GREAT TIME TO GET RICH, RICHER THAN EVER!"

Later, in another message, the US president appeared to be open to negotiating again, this time with Vietnam."I just had a very productive call with To Lam, General Secretary of the Communist Party of Vietnam, who told me that Vietnam wants to reduce its tariffs to ZERO if they can reach an agreement with the US. I thanked him on behalf of our country and told him I look forward to a meeting in the near future," he wrote.