US President Donald Trump has intensified economic pressure on China by sharply raising tariffs on its imports, bringing the total levy to 145 per cent. The move, confirmed by the White House on Thursday, marks a significant escalation in the ongoing trade war between the world’s two largest economies.
Trump had earlier announced a 125 per cent tariff on Chinese goods on Wednesday. The White House later clarified that this figure was in addition to a previously imposed 20 per cent duty, which had been introduced in response to China’s alleged involvement in the fentanyl supply chain.
Speaking at a cabinet meeting, President Trump defended his administration’s tariff strategy, stating: “We’re very, very happy with the way the country’s running. We’re trying to get the world to treat us fairly.” Despite pausing fresh tariffs on dozens of countries for 90 days, the President's stance on Beijing has become more assertive.
Following the latest announcement, Treasury Secretary Scott Bessent stated: “Do not retaliate, and you will be rewarded,” describing the policy as a calculated move to isolate China and rally international support for Washington’s position.
However, Beijing has chosen confrontation over conciliation. It imposed 84 per cent tariffs on US goods in retaliation, with the levies taking effect on Thursday. China has also launched diplomatic efforts to mitigate the impact of the American pressure campaign.
According to Xinhua News Agency, Chinese Premier Li Qiang held talks with European Commission President Ursula von der Leyen, signalling efforts to strengthen Beijing’s relationships with European powers.
“China is willing to work with the EU to jointly implement the important consensus reached by the leaders of China and the EU, strengthen communication and exchanges, and deepen China-EU trade, investment and industrial cooperation,” Xinhua reported.
China’s foreign minister, Wang Yi, has also engaged with the Association of Southeast Asian Nations (ASEAN), while Premier Li has met with business leaders to discuss further economic strategies. “China has already made a full evaluation and is prepared to deal with all kinds of uncertainties, and will introduce incremental policies according to the needs of the situation,” Xinhua quoted Li as saying.
According to the US Commerce Department, China exported $463 billion in goods and services to the US in 2024, trailing only Mexico and Canada. American exports to China stood at a record $199 billion, with key items including soybeans, aircraft, pharmaceuticals, and semiconductors. On the import side, the US sourced mobile phones, computers, toys, and clothing predominantly from China. Although China had been the top source of US imports as recently as 2022, the shift in trade dynamics driven by tariffs and rising tensions has favoured neighbouring countries.
Markets responded with sharp volatility. Trump’s simultaneous decision to pause tariffs for dozens of countries briefly lifted investor sentiment midweek, prompting a rally in equities. The S&P 500 surged 9.5 per cent on Wednesday—the largest single-day gain since 2008. Europe’s STOXX index also rose significantly, marking its sharpest increase since March 2020.
Analysts dubbed the policy shift a “Trump Blink,” although the relief proved short-lived. Earlier in the week, Hong Kong’s Hang Seng Index had already suffered a 13 per cent drop—its worst since the 1997 handover. The STOXX 600 and S&P 500 had also recorded their worst three-day falls since the COVID-19 pandemic.
“We are seeing levels of uncertainty and levels of volatility that we haven't seen since the global financial crisis,” said George Lagarias, chief economist at Forvis Mazars. “These levels of volatility are not good for financial markets. It risks dislocations.”
By Thursday, markets had soured once again. The S&P 500 dropped more than 3 per cent, while gold prices surged nearly 3 per cent to an all-time high. The US dollar plunged to a 10-year low against the Swiss franc, and Treasury yields fell modestly amidst strong bond auction demand, signalling a flight to safety.
Although recent US consumer price data unexpectedly showed a decline for March, it failed to quell investor concerns ahead of the earnings season, which begins Friday with major banking firms such as JPMorgan Chase reporting their results.
With both Washington and Beijing showing no sign of backing down, the prolonged trade conflict threatens to reshape global trade patterns and intensify economic headwinds across multiple regions.
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