Despite the escalating tensions, White House officials indicated that President Donald Trump remains open to negotiations if initiated by Beijing.

The US is implementing a 104% tariff on various Chinese goods on Apr. 9 after midnight New York time, following threats of retaliation from Beijing.

The tariffs include previous levies related to fentanyl and new measures in response to China’s duties on US exports.

Trump criticized China’s handling of the situation but said he was awaiting a call from Chinese officials.

The US stock market initially reacted positively to potential trade deals but later reversed gains after the administration reaffirmed its tariff stance.

Trump has engaged in talks with leaders from South Korea, Japan, and Italy, signaling a willingness to negotiate with allies. Nearly 70 countries have reached out for potential trade agreements.

Treasury Secretary Scott Bessent said priority would be given to allies who avoided retaliatory measures.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ Historical tariff lessons show significant economic risks

The proposed 104% tariffs on Chinese goods would create America’s highest tariff levels since the Smoot-Hawley era of 1930, which economists widely blame for deepening the Great Depression.

While tariffs once generated up to 95% of federal revenue in the 19th century, their modern purpose has shifted to protecting domestic industries at significant consumer cost 1.

Tax Foundation analysis projects that Trump’s proposed tariffs would reduce U.S. GDP by 0.7-0.8% while increasing the average tariff rate from 2.5% to 16.5% in 2025, the highest level since 1937 2.

This economic burden translates directly to American households, with projections showing a per-household tax increase of over $1,900 expected in 2025 as tariff costs pass through to consumers 2.

Historical examples show that previous trade wars typically produce widespread economic damage rather than clear winners, with import reductions of up to 25% causing supply chain disruptions across multiple industries.

2️⃣ Supply chains adapt through trade diversion, not reshoring