China’s not backing down in the tariff fight

Summary

Marketplace Morning Report: China’s Not Backing Down in the Tariff Fight

Release Date: April 8, 2025

In this episode of the Marketplace Morning Report, hosted by Nick Qureshi from the BBC World Service, the focus is on the escalating trade tensions between the United States and China. The episode delves into China's steadfast stance against President Trump's tariff threats, the broader implications for global markets, and the real-world impact on businesses worldwide.

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China's Firm Stand Against U.S. Tariffs

The episode opens with a detailed report on China's aggressive response to President Trump's announcement of increased tariffs on Chinese imports. Nick Qureshi reports that China's Foreign Ministry spokesman, Lin Jian, labeled the U.S. actions as "blackmail" and reaffirmed China's determination to resist the tariff imposition.

Notable Quote:

“Trade wars, tariff wars, have no winners and protectionism has no way out. If the US ignores the interests of the two countries and the international community and insists on a tariff war and a trade war, China will fight it to the end.”
— Lin Jian, Foreign Ministry Spokesman [00:59]

Expert Analysis: The Path Forward

To understand the potential trajectory of this trade conflict, Nick interviews Andy Hsieh, an independent economist based in Shanghai with a background at Morgan Stanley and the World Bank. Hsieh predicts a tit-for-tat escalation, emphasizing that neither side is willing to concede first.

Key Insights:

• China is likely to mirror any tariff increases imposed by the U.S., maintaining a firm stance.
• While both nations stand to lose in a prolonged trade war, the economic stability of each country will influence the outcomes.
• Hsieh points out that China's export dependency on the U.S. is relatively modest at 2.6% of GDP, suggesting resilience against economic downturns that the U.S. might face due to higher debt levels.

Notable Quotes:

“China will respond in kind. It will be more dangerous to back down because if Trump can't get away with it, he will come after you again.”
— Andy Hsieh [01:32]

“If Trump wants to take China to hell, China will take him there and some. And let's see who can come out alive.”
— Andy Hsieh [02:25]

Market Reactions Across Asia

Mariko Oy from Singapore provides a comprehensive overview of the Asian markets, highlighting a mixed trading day despite ongoing trade tensions. Major economies like Japan, South Korea, Australia, Hong Kong, and China experienced a recovery after previous sell-offs. However, markets in Taiwan and Indonesia faced losses, with Indonesia's market activity affected by a recent public holiday.

Notable Quote:

“There are still concerns about that escalating trade war between the world's two biggest economies. And also there are still concerns and worries that the US Economy and possibly even the global economy could fall into a recession.”
— Mariko Oy, Singapore Market Analyst [03:01]

European Markets Respond

Turning to Europe, the report details a rebound in European shares after a period of significant declines. The pan-European European Stocks 600 index rose by 1.5%, recovering from a previous 12% drop. The FTSE 100 in the UK also saw a 2% increase after losing $300 billion in recent days. European trade ministers convened to strategize responses to the impending U.S. tariffs, indicating potential measures to mitigate economic impacts.

Notable Quote:

“They have decided on a list of products that they are going to vote on on Wednesday, possibly to implement tariffs on. But that is not their first choice and it's very clear everybody is saying this is not the first choice. We want to sit down and negotiate.”
— Lin Jian, Foreign Ministry Spokesman [04:27]

Global Business Impacts

The episode highlights the ripple effects of the tariffs on businesses around the world:

1. Madagascar's Vanilla Exporters:

   • Madagascar faces a staggering 47% tariff on its vanilla exports, threatening the livelihoods of farmers who already subsist on less than $1.90 per day. Nissi Ranjumanana, owner of Pink Bay Madagascar, expresses deep concerns over the feasibility of selling vanilla beans under these conditions.

   Notable Quote:

   “If they cannot find a way to sell their vanilla beans, it's really, really a challenge for their daily life.”
   — Nissi Ranjumanana, Pink Bay Madagascar [05:21]

2. U.S. Pharmaceutical Industry:

   • Germany, a significant trading partner for the U.S., particularly in pharmaceuticals, is affected by the tariff threats. Hans Steutl, president of the VFA Association of Research-Based Pharmaceutical Companies, conveys anxiety among his members but notes that pharmaceuticals were initially excluded from President Trump's tariff announcements.

   Notable Quote:

   “With President Trump Rose Garden speech, he did leave the pharmaceutical sector out for probably good reasons. First of all, we need to take care of our patients who are dependent on our drugs.”
   — Hans Steutl, VFA Association President [05:53]

3. UK Footwear Industry:

   • Hayley Pavone of Passion Footwear discusses the severe impact of compounded tariffs on her business, which relies on Chinese manufacturing. The tariffs have effectively doubled the import costs for her products, posing significant financial challenges.

   Notable Quote:

   “We're now going to be looking at a minimum total import cost of 64% and then on our textile line of footwear, up to 90, so effectively doubling our product cost.”
   — Hayley Pavone, Passion Footwear [06:27]

Conclusion

The episode underscores the complexities and far-reaching consequences of the U.S.-China trade tensions. As both superpowers remain entrenched in their positions, the global economy faces uncertainty, with businesses across various sectors grappling with increased costs and disrupted supply chains. The lack of willingness to compromise, as highlighted by experts like Andy Hsieh, suggests that the trade conflict may continue to escalate, further impacting international markets and economic stability worldwide.

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This summary captures the essential discussions and insights from the episode, providing a comprehensive overview for those who haven't listened to the full report.

Transcript

[Kristen Bell]

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[Nick Qureshi]

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[Kristen Bell]

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[Nick Qureshi]

Today, European markets open higher as China vows to fight Trump's tariffs. Live from the uk, this is the Marketplace morning report from the BBC World Service. Hello, I'm Nick Qureshi in for Liana Burn. China has reacted strongly to President Trump's threat to raise tariffs on its imports to more than 100%, saying it would fight until the end. A spokesman for the Foreign Ministry in Beijing, Lin Jian, said China would not give in to what he called blackmail.

[Lin Jian]

I want to stress once again that trade wars, tariff wars, have no winners and protectionism has no way out. If the US ignores the interests of the two countries and the international community and insists on a tariff war and a trade war, China will fight it to the end.

[Nick Qureshi]

China's Foreign Ministry spokesman, Lin Jian. So where does all this go from here? I've been getting the thoughts of Andy Hsieh, an independent economist in Shanghai who used to work for Morgan Stanley and the World Bank. Hi, Andy.

[Andy Hsieh]

Hi, Nick.

[Nick Qureshi]

So how do you think China is going to respond to this latest threat?

[Andy Hsieh]

I think China will respond in kind. It will be more dangerous to back down because if Trump can't get away with it, he will come after you again.

[Nick Qureshi]

An exact tit for tat, do you think?

[Andy Hsieh]

Yes, I think so. If it's 50% tomorrow, China will do 50%.

[Nick Qureshi]

Who seems to have more to lose in this increasing push towards what seems to be a global trade war?

[Andy Hsieh]

Obviously everybody loses, but I think China can deal with it. The exports to the United states are about 2.6% of GDP in value. It's not insignificant, but the country will get over it. For Americans, because the debt levels are so high, if the economy falters, there will be a lot of ramifications, I believe.

[Nick Qureshi]

Do you think China is going to compromise given the fact that neither country seems to want to blink first?

[Andy Hsieh]

Oh no, China will not. If Trump wants to take China to hell, China will take him there and some. And let's see who can come out.

[Nick Qureshi]

Alive and who can, in your opinion?

[Andy Hsieh]

I think Chinese people have seen far worse in the last 150 years. Chinese have been through hell multiple times. This is nothing.

[Nick Qureshi]

Andy Shea, thanks very much indeed. Good to talk to you.

[Andy Hsieh]

Bye bye.

[Nick Qureshi]

On the Asian markets, there were increases after three days of sharp sell offs, but the volatility remains. The BBC's Mariko Oy has been monitoring the ups and downs from Singapore.

[Mariko Oy]

Definitely a calm a day of trading. Most of the major markets here in Asia, including Japan, South Korea, Australia, Hong Kong and even China, where the trade tension with the United States is escalating. But the stock markets are actually making some recovery. There are, however, markets where we're still seeing losses, including Taiwan as well as Indonesia. Indonesia was closed for a public holiday yesterday, so that's why they're playing a bit of a catch up. So a bit of a mixed trading day from Asian markets. I think it's important to emphasize, however, there are still concerns about that escalating trade war between the world's two biggest economies. And also they are still concerns and worries that the US Economy and possibly even the global economy could fall into a recession.

[Nick Qureshi]

Mariko Oy there in Singapore. So let's look at some numbers. European shares rose from 14 month lows on Tuesday after four straight sessions of heavy selling. The pan European European stocks 600 is up 1.5% after shedding 12% recently. And UK stocks on the FTSE 100 have seen a small rebound too, right now up 2% after $300 billion was wiped off in the past few days. European trade ministers met yesterday to discuss their response to the new tariff regime. More from the BBC's Rupert Wingfield Hayes.

[Lin Jian]

They have decided on a list of products that they are going to vote on on Wednesday, possibly to implement tariffs on. But that is not their first choice and it's very clear everybody is saying this is not the first choice. We want to sit down and negotiate. Building a coalition in the EU is always a complex matter, but apparently they have come up with a list and that that will then go back and be voted on on Wednesday. And if negotiations are not forthcoming, they will start to go into effect on the 15th of April and go into full effect. We understand, 30 days later.

[Nick Qureshi]

Rupert Wingfield Hayes so how are businesses across the world dealing with the massive uncertainties caused by the Trump administration's tariffs? The African island nation of Madagascar has been hit with a 47% tariff. It's the world's largest exporter of vanilla. Nissi Ranjumanana is the owner of Pink Bay Madagascar, a vanilla and spice trading company for farmers.

[Nissi Ranjumanana]

It will be terrible for them because Even without these new tariffs, their livelihoods is already under the $1.90 per day according to the World bank parameter. So if they cannot find a way to sell their vanilla beans, it's really, really a challenge for their daily life.

[Nick Qureshi]

The US was Germany's biggest trading partner last year and a major market for the pharmaceutical industry. Hans Steutl is president of the VFA association of Research Based Pharmaceutical Companies.

[Hans Steutl]

Well, our members are of course have a state of anxiety, although in first instance with President Trump Rose Garden speech, he did leave the pharmaceutical sector out for probably good reasons. First of all, we need to take care of our patients who are dependent on our drugs. But of course we followed this very.

[Nick Qureshi]

Closely in the U.S. hayley Pavone runs Passion Footwear and relies on China for manufacturing, but is worried about the scale of tariffs.

[Kristen Bell]

I think something that a lot of people do not understand with these most recent tariffs that have been announced is that that is not the full tariff. That is a tariff that is added on top of previous tariffs as well as on top of the base duty rate. And so for our product in particular, we're now going to be looking at a minimum total import cost of 64% and then on our textile line of footwear, up to 90, so effectively doubling our product cost.

[Nick Qureshi]

Hayley Pavone there. From Passion Footwear in the uk I'm Nick Qureshi with the Marketplace morning reports from the BBC World Service. Thanks for listening.

[Janeli Espinal]

If there's one thing we know about social media, it's that misinformation is everywhere, especially when it comes to personal finance. Financially Inclined from Marketplace is a podcast you can trust to help you get serious about your money so you can build a life you've always dreamed of. I'm the host, Janeli Espinal, and each week I ask experts important money questions, like how to negotiate job offers, how to choose a college that you can afford, and how to talk about money with friends and family. Listen to financially inclined wherever you get your podcasts.