China's retaliatory measures against U.S. tariffs signal a significant escalation of the trade war and will dim the prospects of near-term talks, but the greater economic stakes for both countries will increase the likelihood of a trade deal in the medium to long term and will likely drive China to expand domestic stimulus measures. On April 4, China levied wide-ranging economic restrictions against the United States after U.S. President Donald Trump announced 34% reciprocal tariffs on most Chinese imports on April 2. The Chinese restrictions include a 34% tariff on all U.S. imports (with no exemptions) effective April 10, as well as an export licensing system on seven rare earth elements and related compounds, though the U.S. market was not explicitly mentioned. China also added 16 U.S. firms (mainly defense companies, and no household names) to its export control list, and added 11 U.S. defense firms to its Unreliable Entity...
