The war of fees between America and China will be “long and arduous”

Trade tensions between the United States and China escalated again, after Beijing pledged to respond to the latest threats of US President Donald Trump to impose new customs duties, in a move that warns of prolonging the arduous trade war between the two largest economies in the world, according to the American Bloomberg Network.

For his part, Trump said that China would conclude an agreement at some point, with the severity of tensions between the two largest economies in the world.

The US President imposed 50% customs duties on China, in response to the reprisals imposed on American imports. With these drawings near the entry into force, the majority of Chinese goods will be subject to 104%fees.

Trump also returned and confirmed that Beijing is manipulating the value of its currency, after the external yuan reached its lowest level ever. He added: “They must be recognized by this. They are manipulating their currency today to compensate for the impact of customs duties.”

Beijing responds: a double threat … and the resistance continues

The Chinese Ministry of Commerce announced that the US threats to escalate customs duties represent a “double mistake,” adding: “If the United States insists on its approach, it will fight China to the end.”
This response came a few hours after Trump’s intention to impose additional fees by 50% on Chinese imports, unless Beijing retracts its retaliatory steps against previous fees.
This clear escalation reflects China’s adherence to its position rejecting the American pressure campaign, which weakens the chances of reaching a nearby trade agreement between the two sides.
Also read: Morgan Stanley: America is the most affected by Trump customs definitions

China prepares the markets for a possible commercial separation

“The Chinese speech is strong, and if Trump does not retreat, investors may need to be prepared for a real commercial separation between the two countries,” said Michel Lam, the economist of “Societe General”.
On the other hand, the Chinese authorities intensified their efforts to support the local markets, as the central bank reduced its grip on the yuan to enhance the attractiveness of exports, and the government promised to provide loans and review new economic incentives.

The yuan is retreating .. and the markets respond

The Chinese yuan price has decreased to its lowest level since September 2023 in the internal market, and recorded its lowest level in two months in the foreign markets.
On the other hand, the Hang Sing Index for Chinese companies jumped at 3.7% on Tuesday, after incurring severe losses in the previous session.
Also read: How do companies try to escape the high customs duties of Trump?

Double definitions on China

It is estimated that the new fees announced by Trump will be added to 34% exchange definitions, which are scheduled to be applied on April 9, in addition to an increase of 20% imposed earlier in the year. With this, the rate of cumulative customs duties on Chinese imports reaches 104%, which actually increases the cost of importing any goods from China to the United States.
Despite the escalation of the statements, the Chinese Ministry of Commerce called for dialogue to resolve conflicts, while Trump warned that “all talks with China” will be canceled if Beijing has not taken measures, without clarifying what exactly what is required.

The interruption of communication between Trump and Shi

It is added to the tension that no direct communication between Trump and Chinese President Xi Jinping has occurred since the first return to the White House, which is the longest period in which communication between two presidents has been absent for more than 20 years.

Bloomberg experts: China needs a quick motivation

Bloomberg Economics, Zhang Show, David Chu and Eric Zhu said that increasing trade tension increases the urgent need to accelerate financial and critical stimulation procedures in China, stressing that these steps may come faster than expected.

Beijing: betting on local consumption

For its part, the official newspaper of the Communist Party of China published an editorial in which it confirmed that Beijing is no longer “adhering to the delusions” of an agreement with Washington, and indicated that the current focus is to protect the internal economy and promote local consumption, especially with expectations of a broad impact of fees on exports, which contributed about a third of economic growth in China during the past year.

Procedures to support the Chinese market

As part of its efforts to stop the decline in shares, Beijing pumped great liquidity through investment funds, as a basket of eight boxes circulated on the stock exchange witnessed record net flows of 42 billion yuan (equivalent to $ 5.7 billion).

Install the yuan .. and indicators on more facilitation

The Chinese Central Bank installed the yuan exchange rate at a level exceeding 7.20 for the dollar, which reflects greater flexibility towards the decline in the value of the currency, in an attempt to compensate for the effect of the height of customs duties.
It also supported the expectations of cash stimulus demand for Chinese bonds, to keep the sovereign bonds for ten years near its lowest level since last February.

The impact of definitions on the Chinese economy

Ding Xuang, chief economist for China’s affairs at Standard Chartered Bank, said that Beijing will respond to American drawings with similar measures, but the impact of the new fees will be relatively limited, since Chinese exports to America have already been affected by previous fees.
He added that “the marginal increase in customs definitions, above the current percentage of about 65%, will not have a significant impact, especially in the non -sensitive commodities of the price.”