TARIFFS: THE GLOBAL RESPONSE LED BY CHINA

In response to the tariffs imposed by former President Donald Trump on Chinese products, China announced 34% tariffs on all U.S. imports starting April 10. This measure follows Trump’s decision to impose minimum tariffs of 10% on all global imports and additional surcharges for the United States’ main trading partners, in an unprecedented protectionist move not seen since the 1930s. Furthermore, Trump set tariffs of 20% for the European Union, 24% for Japan, 26% for India, 31% for Switzerland, and 46% for Vietnam. For Latin America, a general 10% tariff will apply, except for Nicaragua, which will face an 18% rate.

China responded not only with tariffs but also with broader restrictions: it included 16 U.S. companies in its export control list, banning the export of dual-use products to these firms. Additionally, it added 11 companies to the list of "unreliable entities," including Skydio Inc. and BRINC Drones, for their sale of weapons to Taiwan. Beijing argues that these measures are intended to protect its sovereignty and national security.

As part of its efforts to defend competitiveness, China also launched anti-dumping investigations into medical products from the United States and India and announced export controls on seven rare earth elements essential to modern technology, including gadolinium and yttrium. Moreover, China will take the case to the World Trade Organization (WTO).

The effects of these trade tensions were immediate. European stock markets dropped sharply, with losses in London (-3.48%), Frankfurt (-4.46%), Paris (-3.83%), Milan (-7.18%), and Madrid (-5.66%). Asian markets also plunged, with Tokyo losing 2.75% and Sydney 2.44%. Analysts from Tokai Tokyo Securities noted that global uncertainty is “greater than ever,” while the IMF warned of significant risks to global economic growth. JPMorgan estimated a 60% chance that the global economy will enter a recession by the end of the year.

International responses vary. The European Union, though divided, is considering retaliatory measures worth up to 26 billion euros in response to U.S. tariffs on steel and aluminum. Countries like Ireland, Italy, Poland, and the Scandinavian nations are taking a cautious stance, preferring to avoid an escalation of tensions. On the other hand, French President Emmanuel Macron urged companies to freeze investments in the U.S. until trade disputes are clarified.

Trump, however, downplayed the negative impact on markets, claiming they will “boom” and that the country will prosper despite his protectionist policies. He also stated that the tariffs give him “great negotiating power.”

For Mexico and Canada, the situation is mixed. Although both countries are subject to certain tariffs—such as 25% on automobiles and steel, and 10% on Canadian hydrocarbons—products covered under the USMCA remain exempt. The White House emphasized that these tariffs aim to encourage cooperation in combating illegal migration and fentanyl trafficking.

Canada, in turn, responded with 25% tariffs on certain U.S. car imports, while Mexico welcomed the fact that many of its products remain exempt under the USMCA. However, both Mexico and Canada have not escaped the tariffs on cars and other strategic products that recently came into effect.

Trump’s trade offensive has had significant global repercussions, especially in Europe and Asia, where falling stock markets reflect the growing economic uncertainty. WTO Director-General Ngozi Okonjo-Iweala warned that these policies could reduce global goods trade by 1% this year.

Finally, as trade tensions continue to escalate, some countries are opting to avoid immediate retaliation. Japan, South Korea, Mexico, and India have chosen to seek concessions before taking more aggressive measures. The United Kingdom, for its part, is seeking an economic agreement to mitigate the impact of the tariffs.

These tensions are unfolding in a complex economic context, where the world's major economies face low growth, recession risks, and increasingly fragmented supply chains.