Trump hits back with tariffs of 125%, after China raises its tariff on US goods to 84%
President Donald Trump on Wednesday raised tariffs on China to 125%, hours after China boosted taxes on American imports to 84% and vowed to “fight to the end” in an escalating battle that threatens to disrupt trade between the world's two largest economies.
The new rate levied by Beijing, which has taken effect, comes in response to Trump's earlier move to raise the tariff on Chinese products to 104% as part of increases that hit U.S. trading partners worldwide. Europe and Canada also hit back Wednesday with new tariffs on imports from America.
Citing lack of respect, Trump responded by raising tariffs on China to 125%, while pausing tariffs on most countries for 90 days.
The hikes are the latest in an ongoing trade war that threatens to raise prices for consumers in America and derail China's attempts to reinvigorate its sluggish economy. The response from the Chinese government signals its determination not to bend to Trump's pressure, despite the risks.
“If the U.S. insists on further escalating its economic and trade restrictions, China has the firm will and abundant means to take necessary countermeasures and fight to the end,” the Ministry of Commerce said before announcing its latest tariff hike.
Beijing also imposed restrictions on doing business with nearly a dozen American companies and said it was launching a new challenge to the American tariffs at the World Trade Organization.
China is a major exporter to US but no longer No. 1
The United States sent a record $199 billion in exports to China last year, while China exported $463 billion in goods and services to the United States, third behind Mexico and Canada, according to the U.S. Commerce Department.
China was the top source of U.S. imports as recently as 2022 but it has lost ground to America’s neighbors amid heightened tensions with the United States.
The European Chamber of Commerce in China accused the U.S. of rolling back many of the principles that have underpinned its approach to trade and investment. It said that Trump's tariffs would have a significant impact on European companies exporting from China to the U.S., forcing them to rethink their business models and supply chains.
“This will lead to a substantial increase in operational costs and inefficiencies, and ultimately higher prices for consumers,” it said.
No ‘easy path’ to restarting U.S.-China trade talks
Though the U.S. and China may want to find a way back to the negotiating table, "this won’t be an easy path to navigate with both countries doubling down and bilateral engagement at a virtual standstill,’’ said former U.S. trade official Wendy Cutler, a vice president at the Asia Society Policy Institute.
China does not appear interested in bargaining, as some other countries have started doing.
“If the U.S. truly wants to resolve issues through dialogue and negotiation, it should adopt an attitude of equality, respect and mutual benefit," Foreign Ministry spokesperson Lin Jian said.
The Chinese Ministry of Culture and Tourism issued a travel advisory asking its citizens to evaluate the risks of visiting the U.S. as tourists and to exercise caution. The advisory, which came shortly after the announcement of the tariff hike, cited the deterioration in economic and trade relations as well as the “safety situation” in America.