Economic Outlook of China Amid 104% US Tariff

Premier Li Qiang has expressed confidence in China’s economic outlook for 2025. The United States, under President Donald Trump, has imposed a sweeping 104% tariff on all Chinese imports. Despite this, Premier Li remains confident.

On a call with European Commission President Ursula von der Leyen, Li stated that China has the necessary policy tools. These tools would cushion any adverse impact from external disruptions effectively. This includes the recently announced American trade penalties. According to an official summary of the conversation, Li emphasized that Beijing’s current macroeconomic strategy has already considered global uncertainties. The government continues to be committed to maintaining stable and sustainable growth.

The discussion between the two leaders happened shortly before Trump’s new trade measures were set to take effect. These measures were scheduled for 12:01 AM on April 9. While European goods now face a 20% import duty, Chinese exports to the U.S. have been hit with an unprecedented 104% levy—part of Trump’s broader push for “reciprocal” trade relationships. A senior U.S. official confirmed to Bloomberg that the implementation is underway.

During the call, Li reportedly criticized the U.S. trade measures as classic examples of unilateralism and protectionist policy. He warned that such actions threaten not only bilateral ties but also the broader principles of fair global trade. “Protectionism leads nowhere,” Li said, advocating instead for openness and international cooperation.

Possible Chinese Countermeasures?

As tensions escalate, Beijing appears poised to respond. Two prominent Chinese influencers close to government circles shared a proposed list of retaliatory steps. The list includes higher tariffs on American agricultural products. It even suggests a potential ban on Hollywood films—a move that could significantly impact the U.S. entertainment industry.

China maintained a firm tone. However, Trump claimed during a public address that “China wants to strike a deal — badly.” This suggests he is open to negotiations. White House Press Secretary Karoline Leavitt later said Trump “will be gracious” if Beijing initiates talks.

Market Reacts With Volatility

The escalating trade conflict rattled Wall Street on Tuesday. The S&P 500 opened strong and surged over 4% in early trading. However, it reversed course and finished the day down 1.6%. The index now sits nearly 19% below its February high. The Dow Jones Industrial Average started with a dramatic 1,460-point rally. It then closed with a 320-point loss. Meanwhile, the Nasdaq dropped by 2.1%.

Analysts attribute the volatile market behavior to investor uncertainty. They are unsure of how the ongoing trade standoff will unfold. There is also concern about its potential impact on global supply chains and corporate earnings.