China Escalates Trade War with 125% Tariffs on U.S. Goods

China has intensified its trade conflict with the United States by raising tariffs on American goods to 125%, up from 84%, in response to U.S. President Donald Trump's latest tariff increases.

The Chinese Finance Ministry announced the move on Friday, signaling Beijing's determination to counter what it views as unfair trade practices.

In a strongly worded statement, the ministry criticized the U.S. tariffs, stating that further escalation “will no longer make economic sense and will be regarded as a farce in the history of the global economy.”

It added that current tariff levels have effectively eliminated the market for U.S. imports in China and warned that Beijing would disregard additional tariff hikes from Washington.

The Trump administration confirmed that U.S. tariffs on Chinese imports now total an effective 145%, following a series of increases, including a 125% reciprocal tariff and earlier levies related to fentanyl concerns.

Economists believe this marks the peak of bilateral tariff escalation, with Zhiwei Zhang, president of Pinpoint Asset Management, noting that further increases are unlikely as both nations evaluate the economic fallout.

Despite the heightened tensions, Beijing has refrained from imposing additional export controls or expanding its "unreliable entity list," which targets American companies operating in China.

A spokesperson for China's Commerce Ministry reiterated that Beijing remains open to negotiations but emphasized that any dialogue must be conducted on equal terms.

The trade war has already caused significant disruptions to global supply chains and economic activity. Goldman Sachs recently downgraded China’s GDP growth forecast to 4%, citing trade tensions and slowing global growth.

Analysts estimate that between 10 million and 20 million Chinese workers are employed in export industries tied to the U.S., underscoring the stakes for both economies.

U.S. Treasury Secretary Scott Bessent criticized China's retaliatory measures, calling them indicative of an “imbalanced economy” and predicting that the escalation would harm Beijing more than Washington.

However, experts warn that prolonged conflict could lead to stagflation in the U.S., marked by rising inflation and slowing growth, while further destabilizing global markets.

Chinese President Xi Jinping, during a meeting with Spanish Prime Minister Pedro Sánchez, reiterated his stance against protectionist policies, stating that “there is no winner in a tariff war.”

Both leaders pledged to strengthen ties in trade and technological innovation amid growing geopolitical uncertainties.