China x US tariff war

In a sharp escalation of ongoing trade tensions, China on Friday announced a 125% tariff on U.S. goods, signalling it would no longer respond to future increases by the United States, declaring such actions economically meaningless.

The move follows a week of financial turbulence marked by tit-for-tat trade measures between the world’s two largest economies. Chinese authorities dismissed U.S. President Donald Trump’s aggressive tariff policy as a “joke” and “a numbers game”, accusing Washington of destabilising global markets.

“The United States’ imposition of round upon round of abnormally high tariffs on China has become a numbers game with no practical significance in economics,” a spokesperson for China’s commerce ministry said. “If the U.S. continues to play the tariff numbers game, China will ignore it.”

The Chinese finance ministry confirmed that the new tariffs will take effect on Saturday. However, it clarified that Beijing has no intention of responding to further tariff hikes from Washington, as “there is no possibility of market acceptance for U.S. goods exported to China” under current conditions.

President Trump recently raised tariffs on Chinese imports to a staggering 145%, while temporarily suspending some others for 90 days. He has championed tariffs as a tool to pressure manufacturers to relocate to the U.S. and to open foreign markets to American products.

China, however, accused Washington of creating global economic instability and announced it would lodge a formal complaint with the World Trade Organisation over the latest round of U.S. tariffs.

Despite acknowledging “transition costs” from his tariff strategy, Trump has brushed off concerns over market volatility. “In the end, it’s going to be a beautiful thing,” he told reporters.

Trump also praised the European Union for its restraint. “They were ready to announce retaliation. And then they heard about what we did with respect to China,” he said.

Yet, EU leaders signalled they are not sitting idly by. European Commission President Ursula von der Leyen told the Financial Times that the bloc is equipped with “a wide range of countermeasures,” including potential levies on digital advertising revenues.

French President Emmanuel Macron echoed the sentiment, urging continued preparation for retaliation. “Europe must continue to work on all the necessary countermeasures,” he said on social media platform X.

Chinese President Xi Jinping, meeting with Spanish Prime Minister Pedro Sanchez, called for deeper China-EU cooperation in response to U.S. unilateralism. “China and Europe should fulfil their international responsibilities… and jointly resist unilateral bullying practices,” Xi was quoted as saying by state media.

Market reactions were swift. Asian markets sank Friday, with Tokyo dropping over 4% following a 9% rally the previous day. European stocks also retreated on news of Beijing’s latest measures.

Meanwhile, oil prices and the U.S. dollar slipped amid fears of a global economic slowdown. Gold surged past $3,200 per ounce as investors turned away from volatile U.S. Treasuries.

“The sugar high from Trump’s tariff pause is fading fast,” said Stephen Innes of SPI Asset Management. “Bottom line: the world’s two largest economies are in a full-blown trade war, and there are no winners.”