China has raised tariffs on U.S. imports from 84% to 125%. This action comes in direct response to U.S. President Donald Trump’s recent decision to increase duties on Chinese goods to 145%.
According to Reuters, China’s Ministry of Finance called the American tariffs “unilateral bullying and coercion,” stating that these extreme measures violate international trade norms and economic logic.
The tit-for-tat escalation now places U.S.–China trade in a critical state, with experts warning that the ongoing tariff war could damage not only both economies but also the global supply chain.
While China hasn’t yet expanded its export controls or blacklisted new U.S. firms, Beijing made it clear: they are prepared to continue retaliating if needed. Chinese officials emphasized that American products may soon have no market in China if Washington keeps raising tariffs.
Liu Pengyu, a spokesperson for the Chinese Embassy in the U.S., said on social media, “If the U.S. truly wants to have talks, it should stop its capricious and destructive behavior. China will never bow to maximum pressure.”
According to a readout from state broadcaster CCTV, President Xi Jinping, in a meeting with Spanish Prime Minister Pedro Sanchez, expressed his concern over Washington’s actions. He stressed, “There are no winners in a trade war,” urging the European Union and China to unite against such unilateral moves.
China also signed two new agricultural trade agreements with Spain for pork and cherries, a sign that it’s looking to strengthen ties with the EU—one of its last major open markets.
Chinese Foreign Minister Wang Yi echoed the same sentiment during a meeting with the International Atomic Energy Agency in Beijing. He stated, “We must not return to a jungle world where might make right.”
Financial markets around the globe reacted with deep concern. Asian stocks dropped in line with Wall Street, and European markets, including the STOXX 600 index, fell over 1%. The euro soared to a three-year high, making European exports less competitive.
Gold reached a new record high, reflecting investor fears and a flight to safe assets. Meanwhile, U.S. government bonds saw a historic sell-off, pushing yields on 10-year Treasury notes to levels not seen in decades.
Goldman Sachs lowered China’s GDP growth forecast to 4%, citing the trade drag. They estimate that 10–20 million Chinese jobs are connected to U.S. exports.
U.S. consumers are also feeling the pressure. A University of Michigan survey showed that consumer sentiment dropped to 50.8, the lowest since 1981, with inflation expectations rising to 6.7%.
Despite the global fallout, the Trump administration appears undeterred. Treasury Secretary Scott Bessent claimed that more than 75 countries are now eager to begin trade talks with the U.S.
Trump himself said, “We are doing really well on our tariff policy. Very exciting for America, and the World!!!”
Still, foreign governments are scrambling to adjust. Japanese Prime Minister Shigeru Ishiba formed a new trade task force, while Vietnam and the U.S. are launching formal trade negotiations. Vietnam, specifically, is working to stop Chinese goods from being rerouted through its ports to avoid U.S. tariffs.
India and the U.S. have also agreed to start preliminary trade discussions. U.S. Trade Representative Jamieson Greer described his schedule as a “full dance card” and confirmed plans to speak with Israeli and Taiwanese trade partners.
UBS analysts issued a stark warning, stating that trade between the U.S. and China has been “essentially severed.” The two nations traded more than $650 billion in goods last year, but analysts now say such commerce may no longer be possible.
Economists like Bill Adams from Comerica Bank highlighted the long-term risks: “Tarifflation will be much more important for the outlook than backwards-looking data. If tariffs stay in place, they will push inflation considerably higher in coming months.”
President Trump’s temporary 90-day suspension of tariffs for other countries has provided only a brief pause in the storm. French President Emmanuel Macron warned, “This 90-day pause means 90 days of uncertainty for all our businesses.”
The U.S.–China tariff war shows no signs of resolution. With rising inflation, plummeting consumer confidence, and market instability, experts fear the worst is yet to come. The global economy, already vulnerable from past disruptions, may be standing on the edge of a new and prolonged crisis.
