China Retaliates in Trade War: Tesla Orders Halt, Global Markets React

Heightened trade friction between the world’s two largest economies marked the recent period, as Beijing implemented retaliatory measures against Washington’s latest tariff increases. This ongoing dispute continues to send ripples through global markets and impacts international business operations.

China Retaliates but Signals Limits

In a direct response to the Trump administration raising levies on Chinese imports to 145%, Beijing announced a significant tariff hike of its own, bringing duties on certain American products to 125%. However, China’s Ministry of Finance indicated a potential shift in strategy, stating that further reciprocal tariff increases lack economic justification. “Even if the U.S. continues imposing higher tariffs, it will no longer make economic sense and will become a joke in the history of the world economy,” the ministry declared. While signaling a halt to the tit-for-tat escalation, the official statement firmly warned, “If the U.S. continues to substantially infringe on China’s interests, China will counterattack and fight until the end.” You can read more about the trade war escalates.

Trade War Hits Tesla Operations

The escalating trade conflict is already having tangible effects on multinational corporations. Electric vehicle manufacturer Tesla (TSLA) has reportedly halted new orders in China for its Model S and Model X vehicles, which are imported from the United States, according to Reuters. Confirmation came as the “order now” option disappeared from Tesla’s Chinese website. News of the suspension negatively impacted the company’s stock, which saw a decline of 7.27%. You can find more about Trump’s Trade Policy here.

Global Responses and Diplomatic Maneuvers

Amidst the trade tensions, international diplomatic activity continues. Chinese President Xi Jinping engaged with Spanish Prime Minister Pedro Sánchez and has planned visits to Southeast Asian nations. Separately, French President Emmanuel Macron voiced skepticism about the recent pause in tariff hikes announced by President Trump, describing it as “fragile”. In a post on X, Macron highlighted the “ninety days of uncertainty for all companies, on both sides of the Atlantic and beyond.” While the European Union temporarily suspended its own retaliatory trade measures following the U.S. announcement, it continues to prepare potential countermeasures. Some analysts believe gold as a safe haven.

US Pursues Limited Trade Agreements

Meanwhile, the Trump administration is reportedly accelerating efforts to secure trade agreements with numerous countries. According to The Wall Street Journal, negotiations are underway with over 70 nations, aiming for partial trade pacts rather than comprehensive treaties. Sources suggest these agreements may lack the scope and depth typically found in traditional free trade agreements. Examining how Trade Agreements will affect global companies.