China hit back at the U.S. tariffs by raising on Friday the Chinese tariff on U.S. goods to 125% from 84% earlier, escalating the U.S.-China standoff.
“The U.S. imposition of abnormally high tariffs on China seriously violates international and economic trade rules, basic economic laws and common sense and is completely unilateral bullying and coercion,” China’s Finance Ministry said in a statement.
Oil prices, which had been climbing before China’s announcement, dropped in response to the news. At the time of writing, both WTI and Brent were in the red at $59.91 and $63.16, respectively.
U.S. President Donald Trump backed down earlier this week from a full-blown trade war with the entire world and announced a 90-day pause in the planned tariffs on all countries. However, China remained in the crosshairs of the Trump Administration, which continued to impose higher and higher tariffs on imports from China.
The U.S. Administration had signaled that countries would be “rewarded” if they did not retaliate.
On Friday, China retaliated and hiked its tariff to 125% for U.S. goods.
“Even if the U.S. continues to impose higher tariffs, it will no longer make economic sense and will become a joke in the history of world economy,” according to a CNBC translation of a statement from the Customs Tariff Commission of the Chinese State Council.
While equity markets took a breather with a short-lived relief rally after the 90-day tariff pause, oil prices continued to be hammered by the U.S.-China trade and tariff tit-for-tat as investors fear economic downturns would dent demand for oil.
Early on Friday in Asian trade, crude oil prices were on track to book their second consecutive weekly loss as markets reel from President Trump’s tariff offensive.
“While the pause offers some relief to markets, there’s still plenty of uncertainty on the trade front,” ING commodity analysts Warren Patterson and Ewa Manthey wrote in a note on Thursday.
“This uncertainty is still likely to drag on global growth, which is clearly a concern for oil demand. Still, conditions are not looking as bad as they were just a few days ago.”
By Tsvetana Paraskova for Oilprice.com
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