China took retaliatory action on Friday in response to President Donald Trump’s decision to impose higher, country-specific tariffs by significantly increasing its own tariffs on American goods. The Chinese Finance Ministry announced that the new levies would rise to 125 percent from the previous 84 percent. This move marks a sharp escalation in the ongoing trade conflict between the two global economic powers.
In a statement shared by the ministry and translated by CNBC, Chinese officials emphasized that the tariff increases by the United States had reached a point of economic absurdity. “Even if the U.S. continues to impose higher tariffs, it will no longer make economic sense and will become a joke in the history of world economy,” the ministry said. The statement added that American goods had effectively lost their place in the Chinese market due to the current tariff levels. “With tariff rates at the current level, there is no longer a market for U.S. goods imported into China,” the ministry said, warning further that “if the U.S. government continues to increase tariffs on China, Beijing will ignore.”
The Trump administration had confirmed on Thursday, a day before China’s announcement, that the effective tariff rate on Chinese imports into the U.S. now stands at 145 percent. This included the latest executive order that increased tariffs on Chinese goods to 125 percent, which was added on top of a previous 20 percent tariff related to fentanyl imposed earlier in February and March.
According to Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, this move may mark the final stage of tariff hikes between the two nations. “This is the end of the escalation in terms of bilateral tariff rates. Both China and the US have sent clear messages, there is no point of raising tariffs further,” Zhang said. He pointed out that the focus now needs to shift toward assessing how these policies are impacting economic activities in both the U.S. and China. He also noted the absence of any indication that either side was ready to begin negotiations or take steps to prevent further disruption to global supply chains.
Notably, China’s response in this latest round has differed from its previous retaliatory tactics. While the country has raised tariffs, it has stopped short of introducing new export controls or adding American companies to its unreliable entity list—a move that would subject those firms to additional operational restrictions within China.
Despite the mounting tensions, China’s Commerce Ministry maintained that Beijing is still open to dialogue. In a separate statement released on Friday, a ministry spokesperson reaffirmed the country’s willingness to negotiate with the U.S. on equal terms, indicating that diplomatic channels have not been entirely closed off.
However, hopes for any significant breakthrough in U.S.-China trade talks have diminished rapidly. Over the past week, Beijing has responded to Washington’s measures with its own set of retaliatory duties on American imports, along with broad restrictions targeting U.S. companies. These tit-for-tat moves have only further strained relations between the two economic superpowers.
U.S. Treasury Secretary Scott Bessent expressed frustration over what he described as China’s unwillingness to engage in meaningful negotiations. In an interview with Fox Business on Wednesday, Bessent criticized the Chinese approach. “It’s unfortunate that the Chinese actually don’t want to come and negotiate, because they are the worst offenders in the international trading system,” he said. He further accused China of maintaining a severely lopsided economic structure, stating, “They have the most imbalanced economy in the history of the modern world, and I can tell you that this escalation is a loser for them.”
The economic impact of this ongoing trade war is already being felt. Investment bank Goldman Sachs revised its forecast for China’s economic growth, cutting the expected GDP rate to 4 percent. The downgrade is attributed to the intensifying trade tensions with the U.S. and broader concerns over a slowdown in global economic growth. According to Goldman Sachs analysts, Chinese exports to the U.S. contribute roughly 3 percentage points to China’s overall GDP. While this may not appear substantial in percentage terms, it carries significant employment implications. The analysts estimated that between 10 million and 20 million Chinese workers are employed in sectors directly tied to goods destined for the American market.
China’s stance remained firm in its latest statements. The country reiterated its commitment to push back if Washington continues actions perceived as harmful to Chinese interests. “Resolutely counter-attack and fight to the end,” China declared on Friday, vowing continued resistance in the face of what it considers economic aggression from the U.S.
Chinese President Xi Jinping echoed this sentiment during a meeting with Spanish Prime Minister Pedro Sánchez on the same day. According to a government readout translated by CNBC, Xi emphasized the futility of trade conflicts. “There is no winner in a tariff war and going against the world will only isolate itself,” Xi said. The Chinese leader and Sánchez agreed to strengthen their nations’ relationship in a variety of areas, including trade, investment, and technological innovation.
While the international community watches closely, the White House has yet to issue any formal response to these recent developments. CNBC noted that the administration did not immediately respond to a request for comment regarding China’s latest tariff increases and statements.
With tensions now at their highest point in months, the likelihood of a quick or easy resolution seems remote. The global economic ramifications are increasingly apparent as both nations dig in, showing few signs of compromise. Businesses in both countries—and worldwide—are bracing for continued uncertainty, potentially prompting a reevaluation of trade strategies and supply chain structures moving forward.
As both Washington and Beijing double down on their positions, economists warn that further escalation could have lasting consequences far beyond their respective borders. For now, the world’s two largest economies remain locked in a standoff that shows no immediate signs of cooling down.