China Retaliate with the Imposition of 125% Tariffs on all U.S. Imports
So the all-out trade war escalates between the United States and China as Beijing announces retaliatory tariffs of 125% (up from 84%) as Donald Trump confirmed that tariffs on China are now effectively 145%. Officials in China confirmed that the 125% tariff will remain no matter if the White House decides to increase tariffs as the levies are now so high there is no longer a market for goods in China imported from the United States.
Chinese experts in this arena have advised that there is no sign from officials from either the United States or China that their respective governments would start negotiations which would avoid a negative impact on global supply chains. However, one official from China’s Commerce Ministry was quoted as saying, “Beijing is open to negotiate with the United States on an equal footing”.
Once again Treasury Secretary Scott Bessent was on the offensive saying, “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”. He went on to say, “They have the most imbalanced economy in the history of the modern world, and I can tell you this escalation is a loser for them”.
Analysts suggest that due to the drag from U.S. trade tensions and slower global growth, China’s GDP (Gross Domestic Product) for this year will be 4%. They further advised that exports from China to the United States only accounted for circa 3% of GDP, however there is a possible negative impact on employment with circa 10–20 million Chinese workers involved with exports to America.
Elsewhere the previous U.S. Treasury Secretary under President Biden has unleashed nothing less than a massive broadside against President Trump and his economic policies, saying, “President Trump has taken a wrecking ball to the U.S. economy”. She commented that Trump and his officials have declared that they had inherited an economy in a “state of calamity and catastrophe”. However, Yellen noted the Economist back in October 2024 said the U.S. economy was the envy of the world.
As already advised previously on this website, U.S. tariffs may well drive other countries including those in the western world further into the arms of China. China is already Europe’s largest trading partner and at a meeting today between Chinese President Xi Jinping and Spanish Prime Minister Pedro Sanchez, Xi said that China and the EU (European Union) must join together in defending globalisation and oppose unilateral acts of bullying. Already the Spanish Agricultural Minister has said, “Spain will pursue closer trade ties with China in the interest of its citizens”.
As Democrats and some Republicans, along with leaders and officials of trading partners with the U.S,. a timely reminder is that the U.S. trading deficit with other countries amounted to USD 130.7 Billion in January 2025 and USD 122.7 Billion in February 2025, and many economists have voiced their wonder about how previous administrations and congress were so happy with this situation.
Obviously Donald Trump is not and has the bit between his teeth but perhaps there was a better way of rebalancing the deficit away from using tariffs. Only time will tell, but the U-turn on tariffs (10% across the board apart from China) giving a 90-day pause, is perhaps part of his intended policy (as confirmed by U.S. Commerce Secretary Howard Lutnick) bringing trading counties to the negotiating table.
