US hitting China with 145% tariffs, White House confirms
In the last few moments, the BBC confirmed that US hitting China with 145% tariffs. Uh, that is on top of — that is including — the existing 20% tariffs that were already imposed on the country at the beginning of the year. And also, after yesterday’s huge rally on Wall Street, today we are seeing a very different picture. Share prices are falling on the US stock exchange as uncertainty continues over the US trade policy. The Dow is down 3.4%, the S&P 500 is down 4.2%, and the Nasdaq is down 5%.
Trading, however, in Europe and Asia saw prices surge. So let’s talk to our correspondents in Washington and in New York. Jake Quan joins us first. And Jake, we’ve got this clarification from the White House as to the tariffs that China faces. Just talk us through what we’re learning, because initially we’d thought that China was on a 125% tariff already — eye-watering — but we’ve had some kind of clarity now.
Yes, I mean, the US hitting China with 145% tariffs is the clarification from the White House today. We might — the BBC finally has that number now. Uh, but there was a bit of confusion earlier, because, yes, as you say, Mr. Trump had tweeted earlier — sorry, put it on his Truth Social earlier — that the tariff rate on China will be 125%.
Uh, so now the White House has clarified that, yes, there is the existing 20% that Mr. Trump has slapped on China due to what he accuses China of — letting fentanyl flow to the US. Uh, so the US hitting China with 145% tariffs. But I want to point out that this is kind of a telling of how much confusion and still uncertainty around this tariff announcement that US hitting China with 145% tariffs.
Even in the Congress here, we saw earlier the Republican and the Democratic senators talk about this tariff issue, and there seems to be an amazing amount of confusion. Uh, let me just read you one quote from Republican Senator Ron Johnson, and he was saying, “I still don’t know what his total strategy is,” referring to Mr. Trump. “I don’t know what the endgame is here.” And Democratic Senator Elisa Slotkin — she was saying, “I’m just trying to understand what the hell is happening.”
And it seems that there’s even confusion amongst the White House, amongst the staff of Mr. Trump. Uh, yesterday we saw Mr. Jameson Greer, who is Mr. Trump’s top trade official. He was testifying in front of Congress, and as he was testifying for hours, he appeared to be unaware of this 90-day pause that Mr. Trump had announced. And that led him to being berated by one of the Democratic politicians, saying that, “Hey, your boss seems to know something that you don’t.”
Uh, so all this uncertainty — it looms over what the market is going to do for the next 90 days.
Yeah, and on that, let’s cross over to Erin Delmore and have a look at what the markets are doing. Jake, thank you very much. Because, Erin, yesterday we saw that absolutely huge rally — that surge upwards. Today, however, the markets are not looking so good, and US hitting China with 145% tariffs.
Right, and that’s a reaction to the sizable tariffs that remain in place on US imports from China. As you said, the US hitting China with 145% tariffs. 20%, the administration has said, is in response to China’s handling of the fentanyl crisis, and an additional 125% was put into effect yesterday.
Now that makes investors uneasy, and we’re seeing it play out on Wall Street. The Dow is down nearly 1,700 points as we speak. That’s down 4.14%. The S&P is down closer to 5%, the Nasdaq down more than 5% — in fact, about 5 and 3/4.
But what we need to do, as much as we can talk about the historic rally yesterday on Wall Street, is actually take the numbers back to April 2nd, which is when President Trump announced his tariffs. If we go back to that mark, the S&P is down around 6%.
So as much as we can talk about this rollercoaster ride that we’ve had in the last weeks — and yes, the S&P landed above 9% yesterday — that’s a one-day high since 2008. The Dow, a one-day high going back to as far as March 2020. The Nasdaq saw its best day since 2021.
Yes, all banner numbers, but put it into context with what we’ve seen over the last week, and the S&P, that broad 500-company index, is broadly down.
Erin, as always, thank you very much. Erin Delmore, there, our North American business correspondent. Also, our thanks to Jake Quan, joining us from Washington on the very latest there.
And just a line coming from the former US Treasury Secretary Janet Yellen, who is saying that the threat — the instability from the falling of the markets, then the falling prices for the US Treasury debt — that is, of course, the bonds, that was the reason, she reckons, why Donald Trump then created this pause.
Of course, we’re hearing from the White House that this was always part of the plan. So a little bit of confusion, and not least with the tariffs on China. A lot to discuss. I’m pleased to say that our economic correspondent Andy Verity joins us now.
And Andy, we were hearing about that confusion there. You know the saying goes: markets hate confusion.
Yes. But that’s the messaging we’re getting. It’s mood swings, isn’t it? We have this sudden euphoria overnight, and then you’re hit by this sobering realization in the hangover of the next day — that you still have, even if you don’t have quite the multilateral trade war that Trump was talking about a few days ago, a bilateral trade war on a scale we haven’t seen in decades with the US and China, and all kinds of uncertainties facing the auto industry, facing the likes of Canada and Mexico, who still face 25% tariffs and US hitting China with 145% tariffs.
Basically, all kinds of uncertainty. In any case, the trade war has just been postponed for 90 days. He hasn’t canceled it.
Exactly, and that’s really important just to keep stressing there. We saw that Wall Street has opened — it opened a little bit lower. There’s still a lot of angst, I guess. Europe, though, they were looking a little bit more comfortable today.
So what do we read into that comparison?
Well, I mean, I think you have to look at the timings of the various announcements. The markets in Europe have been playing catch-up for most of the day, but with some trepidation because even as they were looking at the S&P 500 — that covers the shares of the top 500 companies listed in New York — going up by 9% yesterday, they weren’t actually edging up by as much because they knew that something bad would come today and the US hitting China with 145% tariffs.
And they were right. You know, the traders were predicting that there’d be less of a performance on the American markets today, and that’s exactly what’s happened. And I think part of it is that the fundamentals of the financial system are still looking shaky.
That sell-off in US treasuries that we saw yesterday and the day before — although it’s recovered some of the ground — it hasn’t got back to where it was before Trump announced these major tariffs over the past week or so. And that has undermined confidence in a bedrock of the global financial system — namely, the stability of US treasuries and US Treasury bonds — which, until now, were the safe haven in a time of crisis.
And that is certainly what the former US Treasury Secretary Janet Yellen was saying. She was speaking to a US broadcaster, and she said it was the movement in the bonds that spooked — or to use Donald Trump’s word, “yippied” or however he says it — him in order to create this pause.
Yeah. He said the markets were getting a little bit yippy. We don’t really know what that means, but it certainly doesn’t seem to overstate how things were. Because in 2008, the financial crisis, you didn’t have people selling bonds. They were a shelter. They were a place for a flight to safety.
You only had it really in the last few decades in the COVID crisis when there was the dash for cash. People were worried governments couldn’t afford all the money they’d have to spend on support measures during the lockdowns, and therefore they sold even US Treasury bonds.
That will have prompted some very heated discussions. We can’t know what they were, but I think Janet Yellen is speculating that he would have been told in no uncertain terms: “You’re undermining our status, not only as a foundation stone of the global financial system, but also as the place where people look to for stability.”
And if you want to give up that status, that could also undermine the dollar. And again, we’re seeing today that people have been selling the dollar. That’s something that’s going to worry President Trump at a time when, in theory, his tariffs — if what he says is true — are going to be good for the American economy.
Andy, so much to discuss. Thank you so much, as always. Andy Verity is there.
So let’s just pick up on that — our understanding now that what the White House has clarified, the US hitting China with 145% tariffs.
We can speak to Jang Yuan Zo Lui, who’s the Morris Greenberg Senior Fellow for China Studies at the Council on Foreign Relations.
Zoe, welcome to BBC News. I guess, regardless of whether it’s 125 or 145% and the US hitting China with 145% tariffs, if you count in that original 20% from January when Donald Trump came into office, we’re talking about unrealistic and absolutely unsustainable figures here.