FX.co ★ China Floats Policy Easing After Tariff Escalation

China has signaled its readiness to lower borrowing costs and potentially ease reserve requirements for lenders, as a countermeasure to the economic impacts of the latest tariffs imposed by U.S. President Donald Trump. This indication comes from a commentary published on the front page of the People’s Daily, the official newspaper of the Communist Party. The commentary suggests that adjustments to the reserve requirement ratio and key policy interest rates could be implemented at any moment. Furthermore, the article highlights the possibility of expanding the fiscal deficit, issuing special treasury bonds, and increasing special debt as potential strategies. In response to Trump's latest tariff actions, Beijing retaliated on Friday with significant tariffs on all U.S. goods and fresh export controls on rare earth elements, causing disruptions in global markets. The Chinese government has announced a 34% tariff on all American imports starting April 10, reflecting the level of what the U.S. terms as reciprocal tariffs on Chinese products. Trump promptly condemned China's move, referring to it as the "wrong" decision.