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.
"Based on the lack of respect that China has shown to the World's Markets, I am hereby raising the Tariff charged to China by the United States of America to 125%, effective immediately," Trump wrote on Truth Social. "At some point, hopefully in the near future, China will realize that the days of ripping off the U.S.A., and other Countries, is no longer sustainable or acceptable.
"Conversely, and based on the fact that more than 75 Countries have called Representatives of the United States, including the Departments of Commerce, Treasury, and the USTR, to negotiate a solution to the subjects being discussed relative to Trade, Trade Barriers, Tariffs, Currency Manipulation, and Non Monetary Tariffs, and that these Countries have not, at my strong suggestion, retaliated in any way, shape, or form against the United States, I have authorized a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10%, also effective immediately.
"Thank you for your attention to this matter!"
Treasury Secretary Scott Bessent told reporters that Trump was pausing his "reciprocal" tariffs on most of the country's biggest trading partners, but maintaining his 10% tariff on nearly all global imports.
It was seemingly an attempt to narrow what had been an unprecedented trade war between the U.S. and most of the world to one between the U.S. and China.
Global markets surged on the development.
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.
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.
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.
Trump has now raised the tariff on Chinese goods five times since taking office in January. The first two hikes of 10% each were met with what analysts described as a measured response from China that left the door open for talks.
But after Trump announced an additional 34% tariff on Chinese goods last week, along with tariffs on other countries in his "Liberation Day," China matched that with a 34% tariff on imports from the U.S.
Trump then added a 50% tariff on goods from China, saying negotiations were terminated, and bringing the cumulative U.S. tariff to 104%. China responded by raising the tariff on American products by the same amount, bringing its total rate to 84%.
China's latest measures include adding 11 American companies to an "unreliable entities" list that bars Chinese companies from selling them goods that could have military uses. Among the companies are American Photonics, and SYNEXXUS, which both work with the American military.
A Chinese position paper issued Wednesday said that the U.S. has not honored the promises it made in an earlier "Phase One" trade deal concluded during Trump’s first term. As an example, it said a U.S. law that would ban TikTok unless it is sold by its Chinese parent company violates a promise that neither would "pressure the other party to transfer technology to its own individuals."
Trump signed an order to keep TikTok running for another 75 days last week after a potential deal to sell the app to American owners was put on ice. Representatives from ByteDance, the parent company, told the White House that the Chinese government would no longer approve a deal until there could be talks on trade.
"History and facts have proven that the United States’ increase in tariffs will not solve its own problems," the Commerce Ministry said in a statement introducing the paper. "Instead, it will trigger sharp fluctuations in financial markets, push up U.S. inflation pressure, weaken the U.S. industrial base and increase the risk of a U.S. economic recession, which will ultimately only backfire on itself."
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