Beijing has announced it will increase tariffs on American goods from 84% to 125%, marking the latest escalation in the ongoing trade dispute between the world's two largest economies. The move is anticipated to further unsettle global markets and heighten concerns about a potential economic slowdown.
This decision follows President Trump's recent pause on import taxes for most countries, while simultaneously raising tariffs on China to a total of 145%. China has condemned the U.S. policy as "economic bullying" and pledged to implement countermeasures. The new tariffs are scheduled to take effect on Saturday.
A spokesperson for China's Finance Ministry stated that Washington's repeated tariff increases "will become a joke in the history of the world economy." However, the spokesperson warned that "if the U.S. insists on continuing to substantially infringe on China's interests, China will resolutely counter and fight to the end."
The Chinese Commerce Ministry has also announced that it will file another lawsuit with the World Trade Organization (WTO) in response to the U.S. tariffs.
During a meeting with Spanish Prime Minister Pedro Sanchez, Chinese leader Xi Jinping remarked, "There are no winners in a tariff war." He added, "For more than 70 years, China has always relied on itself and hard work for development, never relying on favors from anyone, and not fearing any unreasonable suppression."
Foreign Minister Wang Yi emphasized China's firm stance against Trump's tariffs, stating that it is not only to protect its own rights and interests but also to "safeguard the common interests of the international community to ensure that humanity is not dragged back into a jungle world where might makes right."
Wang made these comments during a meeting with Rafael Mariano Grossi, director general of the International Atomic Energy Agency in Beijing, adding that China will "work together with other countries to jointly resist all retrogressive actions in the world."
Trump's inconsistent approach to tariffs has triggered unease in stock and bond markets, leading some experts to suggest the U.S. may be headed for a recession. While the temporary pause on tariffs for most countries provided some relief, concerns persist due to the significant economic positions of the U.S. and China.
Jennifer Lee, a senior economist at BMO Capital Markets, observed, "The risk that this escalating trade war tips the world into a recession is rising as the two largest and most powerful countries in the world continue to punch back with higher and higher tariffs. No one truly knows when this will end."
The Chinese tariffs are set to impact key U.S. exports, including soybeans, aircraft and related parts, and pharmaceuticals. In recent weeks, Beijing has also suspended imports of sorghum, poultry, and bonemeal from certain American companies and has increased export controls on rare earth minerals, which are essential for various technologies.
Meanwhile, the United States' primary imports from China include electronics like computers and cell phones, industrial equipment, and toys. Consumers and businesses are likely to experience price increases as a result of the current 145% tariff rate.
On Wednesday, Trump announced the 125% tariffs on China but did not include a previously discussed 20% tariff related to China's role in fentanyl production.
White House officials express hope that the import taxes will stimulate domestic manufacturing job growth by encouraging companies to relocate production back to the United States, a move that could have political implications but may take years to accomplish, if at all.