China has raised tariffs on American goods to as high as 125 per cent, intensifying the already tense trade dispute with the United States.
The decision follows US President Donald Trump’s recent announcement of a 145 per cent tariff on selected Chinese imports, adding further strain to the fragile trade relationship between the two global economic powers.
In a strong statement released on Friday, China’s Ministry of Finance warned that the country would not stand down. “If the US insists on continuing to infringe upon China's interests in a substantive way, China will resolutely take countermeasures and fight to the end,” the ministry said, as quoted by Reuters.
The ministry further noted that should the US persist with additional tariffs, China would “ignore it,” signalling Beijing’s readiness for a prolonged confrontation.
President Trump’s aggressive trade manoeuvre includes a general 125 per cent tariff and an additional 20 per cent penalty targeting China’s alleged involvement in the US fentanyl crisis. This latest move has been widely seen as a direct challenge to Beijing’s authority and economic ambitions.
Prior to this, the US had already increased tariffs on Chinese goods to 104 per cent. In response, China initially retaliated with an 84 per cent duty on all US imports earlier in the week.
However, following the latest developments from Washington, Beijing swiftly raised the figure to 125 per cent, highlighting the rapid escalation in tit-for-tat trade measures.
Despite adopting a combative stance, Chinese officials have not completely shut the door on negotiations. On Tuesday, authorities reaffirmed their resolve to “fight to the end” while also signalling a willingness to engage in dialogue to prevent further deterioration of economic ties.
Amid the growing uncertainty, President Xi Jinping has urged the European Union to join hands with China in resisting what he described as Washington’s “unilateral bullying.”
During a meeting with EU officials, Xi emphasised the need for China and Europe to uphold their international responsibilities and counter the US approach collectively, according to reports from AFP.
The ripple effects of the intensifying trade war are being felt across global financial markets.
According to Bloomberg, three of the largest US-listed exchange-traded funds (ETFs) focused on Chinese stocks saw nearly $1 billion worth of shares sold off in a single day. While Chinese markets have managed to display some resilience, investor sentiment remains fragile.
To cushion domestic markets from the shocks of trade volatility, China has reportedly employed state-backed funds to stabilise share prices, with purchases in both stocks and ETFs aimed at bolstering investor confidence.
Analysts are warning that if both sides continue to dig in, the consequences could be long-lasting and far-reaching. The current tariff exchange not only threatens to disrupt global supply chains but also risks placing additional pressure on already fragile economies worldwide.
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