China Escalates With 125% Tariff On US Imports, Signals Will “Ignore” Future Retaliation
Around the close of Hong Kong trading hours, Beijing retaliated against President Trump’s tariffs by hiking levies on U.S. goods to 125%, up from the prior 84%. In a notable shift, the Chinese Communist Party announced it would “no longer respond” to any further tariff increases from Washington.
As the week concludes, the U.S. and China are locked in a heated, once-in-a-century trade war. Earlier, President Trump announced a 90-day suspension of additional country-specific tariffs for countries that have refrained from taking retaliatory measures—an apparent attempt to isolate China and use tariffs to get Beijing to strike a trade deal.
The State Council Tariff Commission announced that China will raise tariffs on U.S. goods from 84% to 125% effective Saturday. The move comes in direct response to President Trump’s effective tariff rate on Chinese imports, which now totals a whopping 145%.
“Given that at the current tariff level, there is no market acceptance for U.S. goods exported to China. If the U.S. continues to impose tariffs on Chinese goods exported to the U.S., China will ignore it,” the council said.
In a separate statement, the Commerce Ministry expressed, “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 the world economy.”
In what appears to mark a pause in the escalation of the bilateral tariff war, Beijing has shifted toward non-tariff retaliation—limiting Hollywood film imports, slowing rare earth export shipments, and allowing the yuan to weaken.
“This is the end of the escalation in terms of bilateral tariff rates. Both China and the U.S. have sent clear messages, there is no point of raising tariffs further,” said Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, quoted by CNBC.
Wall Street analysts have already trimmed sales estimates for Apple and Tesla in China, the world’s second-largest economy. Meanwhile, speculation mounts that Beijing may have quietly reduced its holdings of U.S. Treasury bonds as part of its broader counteroffensive.
Zhang noted that assessing the U.S. and China’s economic fallout will be next. He emphasized there are no indications that either government is preparing to reenter negotiations. Meanwhile, early signs of supply chain disruptions have been reported:
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Goldman analysts Andrew Tilton, Hui Shan, and others lowered their China GDP forecasts because of the trade war:
“We are revising our real GDP growth forecasts for 2025 and 2026 downward to 4.0% and 3.5%, respectively, from our previous projections of 4.5% and 4.0%.”
Tilton expects the Chinese government to ramp up easing support to offset tariff turmoil.
Despite a week of tit-for-tat trade wars, a spokesperson for China’s commerce ministry reiterated that Beijing is open to negotiating with the U.S.
The question becomes how long China can weather the economic storm, given U.S. Treasury Secretary Scott Bessent’s comments earlier this week, calling the Chinese economy “the most imbalanced economy in the history of the modern world, and I can tell you…
