The trade war between the United States and China intensified on Friday as President Donald Trump raised tariffs on Chinese goods to 145% and Beijing responded with a matching 125% tariff on US goods.
The standoff between the world’s two largest economies has sent ripples through global markets and sparked fears of deepening economic fallout for businesses and consumers in both countries.
Trump announced that levies on Chinese imports would jump to 145% effective immediately.
The White House paused tariffs on more than six dozen other countries at 10% for 90 days.
China delivered its own counterpunch.
By Friday, Beijing had unveiled a 125% tariff on all US goods, up from its previous rate of 84%.
China’s State Council said in a statement it would “fight to the end” rather than “bow to America.”
“If the US insists on substantively damaging China’s interests, China will firmly retaliate and fight to the end,” said the State Council statement.
Officials in Beijing argued that Trump’s actions “no longer have any economic significance,” because such high tariffs make US exports to China too expensive to be competitive.
China’s latest tariffs, set to take effect on Saturday, show how firmly both sides have dug in their heels.
Chinese leader Xi Jinping, meeting on Friday with Spanish Prime Minister Pedro Sanchez, urged European nations to “jointly oppose unilateral bullying.”
Jinping also emphasized that trade wars produce no winners.
European leaders echoed that sentiment, expressing concern over the 90-day pause that Trump gave to countries other than China.
The delay created uncertainty for global businesses and warned that any failed negotiations could trigger a new wave of retaliation.
French President Emmanuel Macron took to social media to call the pause “fragile,” saying that existing duties on steel, aluminum, and automobiles remain in place.
“Fragile, because this 90-day pause means 90 days of uncertainty for all our businesses, on both sides of the Atlantic and beyond,” Macron wrote on Twitter/X.
Macron said that Europe should continue working on “all necessary countermeasures” if talks collapse with the US.
The tariffs have already caused significant disruptions in stock markets around the world.
Shares in Asia swung sharply on Friday, with Japan’s Nikkei 225 and Topix indices plummeting by five percent before trimming their losses to close around three percent lower.
Hong Kong’s Hang Seng Index and China’s Shanghai composite index ended the day mostly flat, while Taiwan’s market staged a small recovery to post a 2.5% gain.
In Europe, Germany’s DAX, France’s CAC, and London’s FTSE 100 all opened lower but stabilized by halfway through the trading day.
French officials, including Macron, remain concerned that the short-term pause does little to ease tensions.
German Finance Minister Jorg Kukies warned that if talks fail, Europe stands ready to respond with its own set of measures.
European Commission President Ursula von der Leyen affirmed that the bloc will hold off on further retaliation for 90 days but stressed that “all options remain on the table.”
US stock indexes posted steep declines on Thursday after Trump’s tariff announcement.
The S&P 500 slid 3.46%, while the Nasdaq composite index dropped 4.26%.
The Dow Jones Industrial Average also fell 2.54%.
Those downturns contrasted sharply with the major gains seen just a day earlier, when the S&P 500 recorded its most significant one-day rise since 2008.
The Trump administration plans to address the tariff issue through a combination of direct talks between Trump and certain nations, and separate negotiations led by senior officials for other smaller trading partners.
Observers argue that the fragmented approach might complicate the search for a universal deal, especially considering the diverse range of conflicting interests.
In Asia, nations reliant on exports to the US are bracing for impact.
Japanese Prime Minister Shigeru Ishiba pledged to safeguard crucial industries, such as automotive and steel, and South Korea’s Finance Minister Choi Sang-mok announced a financial assistance package worth about $6.2 billion USD for businesses most exposed to US markets.
Taiwan’s President Lai Ching-te said his government would increase military purchases from the US to maintain stable relations during the trade war.
Experts warn that North American and Chinese consumers could soon feel the pinch.
The Budget Lab at Yale University estimated that an average US household may lose around $4,700 USD at last year’s price levels once the new duties take full effect.
The same study suggested the tariffs would take about 1.1% off the US gross domestic product.
China, for its part, continues to grapple with homegrown pressures, including a weak property sector, elevated youth unemployment, and sluggish consumer spending.
On Thursday, investment bank Goldman Sachs cut its forecast for China’s economic growth this year to four percent, down from Beijing’s target of about five percent, pointing to rising trade tensions as a key factor.
Despite the grim outlook, both countries insist they remain open to negotiation.
However, with each side vowing to stand its ground, analysts caution that the conflict could escalate further before meaningful talks resume.
The world watches as tariffs rise, markets fluctuate, and the global economy teeters on the edge of uncertainty.