China hits back with 125% tariffs on US goods as trade war escalates

China hits back with 125% tariffs on US goods (Photo: Reuter)

On Friday, China responded to US President Donald Trump's country-specific tariffs by raising tariffs on US imports to 125%, up from 84% previously, according to an announcement from the Chinese Ministry of Finance.

“Even if the U.S. continues to impose higher tariffs, it will no longer make economic sense and will become a joke in the history of world economy,” the ministry said, according to a CNBC translation.

The statement also stressed that: “With tariff rates at the current level, there is no longer a market for U.S. goods imported into China.” It also warned: “if the U.S. government continues to increase tariffs on China, Beijing will ignore.”

The total tariffs the US is imposing on Chinese goods now amounts to 145%, the Trump administration confirmed to CNBC on Thursday. Trump’s latest executive order raises tariffs to 125%, with an additional 20% on fentanyl-containing products imposed in February and March.

“This is the end of the escalation in terms of bilateral tariff rates. Both China and the US have sent clear messages, there is no point of raising tariffs further,” said Zhang Zhiwei, chairman and chief economist at Pinpoint Asset Management.

The next step, Zhang said, would be to assess the damage to economic activity in both countries. He also noted that there is no sign that the two governments will return to the negotiating table soon to avoid major disruptions to the global supply chain.

Unlike previous rounds of retaliation, Beijing did not announce additional export controls or expand its "unreliable entities" list — a list of US companies that could face restrictions on operating in China.

Despite the escalation, however, a spokesperson for China’s Ministry of Commerce said in a separate statement that Beijing was willing to negotiate with the US on an equal footing.

Hopes for a US-China deal to ease trade tensions have dimmed as China has retaliated in the past week, including imposing retaliatory tariffs on US goods and imposing restrictions on US companies operating in China.

“It’s unfortunate that the Chinese actually don’t want to come and negotiate, because they are the worst offenders in the international trading system,” US Treasury Secretary Scott Bessent told Fox Business on Wednesday, after China raised tariffs to 84%.

“They have the most imbalanced economy in the history of the modern world, and I can tell you that this escalation is a loser for them,” Bessent said.

Goldman Sachs on Thursday cut its GDP growth forecast for China to 4%, citing the impact of trade tensions with the US and slowing global growth.

Although China’s exports to the US only account for about 3 percentage points of the country’s total GDP, Goldman Sachs said the impact on employment would still be significant. An estimated 10 to 20 million Chinese workers are involved in industries that produce goods for export to the US.

In a statement on Friday, China continued to affirm that it would “resolutely counterattack and fight to the end” if the US continued to infringe on its national interests.

“There is no winner in a tariff war and going against the world will only isolate itself,” Chinese President Xi Jinping said at a meeting with Spanish Prime Minister Pedro Sánchez on Friday, according to a government transcript translated by CNBC. The two leaders also pledged to deepen cooperation in areas such as trade, investment and technological innovation.

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Source: Phaata.com (According to CNBC)

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