In a dramatic escalation of trade tensions between the world’s two largest economies, China has announced it will raise tariffs on a wide range of United States goods to an unprecedented 125% beginning Saturday, April 12, 2025. The move marks a major retaliation in the ongoing trade standoff that has rattled global markets and threatens to further destabilize international economic relations.
The Chinese Finance Ministry issued a strongly worded statement on Friday, dismissing further tariffs by former U.S. President Donald Trump as economically irrelevant. The ministry noted that American goods have become virtually unsellable in the Chinese market due to the cumulative impact of escalating tariffs.
“At the current tariff level, there is no possibility of market acceptance for U.S. goods exported to China,” the Chinese Commerce Ministry said. “The United States’ imposition of round upon round of abnormally high tariffs has become a numbers game with no practical economic significance.”
In a clear message to Washington, Beijing declared that it will no longer respond to subsequent rounds of U.S. tariff increases, effectively signaling an end to tit-for-tat negotiations. Instead, the Chinese government plans to file a formal complaint at the World Trade Organization (WTO) over the latest U.S. tariff hikes, accusing Washington of destabilizing the global trading system.
China’s latest move follows Trump’s announcement earlier in the week, where he froze most tariff increases on other nations for 90 days while simultaneously raising tariffs on Chinese imports to a staggering 145%. The former president defended his aggressive trade stance as a necessary corrective to what he called “unfair” global trade practices.
“In the end, it’s going to be a beautiful thing,” Trump told reporters, brushing off concerns over economic fallout. “Yes, there’s transition cost and transition problems, but we’re bringing manufacturing back to America.”
Global financial markets, already jittery from the ongoing conflict, reacted negatively to China’s announcement. Asian markets were among the hardest hit, with Tokyo’s Nikkei index falling more than four percent, following a nine percent surge the previous day. European stock exchanges also declined, while Wall Street futures indicated further drops in U.S. equities.
The commodities market wasn’t spared. Crude oil prices fell sharply amid fears of a global economic slowdown, and the U.S. dollar weakened as investors flocked to safe havens. Gold hit a historic high, soaring past $3,200 per ounce, and U.S. Treasury bonds—typically seen as a rock-solid investment—were sold off en masse.
“The sugar high from Trump’s tariff pause is fading fast,” said Stephen Innes of SPI Asset Management. “What we are witnessing is a full-blown trade war—and there are no winners.”
European leaders have voiced concern over the U.S.-China standoff and have hinted at preparing their own responses. European Commission President Ursula von der Leyen told the Financial Times that the EU is considering imposing levies on U.S. tech giants, including taxing their digital advertising revenues.
French President Emmanuel Macron echoed the sentiment, urging the EU to finalize countermeasures in the event negotiations with the U.S. collapse. “Europe must continue to work on all the necessary counter-measures,” Macron said on X (formerly Twitter).
Meanwhile, Chinese President Xi Jinping is ramping up diplomatic efforts, calling on the European Union to join forces with China to oppose “unilateral bullying” by the U.S. In talks with Spain’s Prime Minister Pedro Sanchez, Xi emphasized the importance of defending multilateralism and global trade fairness.
The ripple effects of the trade war are already prompting a realignment of global trade partnerships. Canada has expressed willingness to renegotiate a new economic agreement with the U.S., and Vietnam and Pakistan have both announced plans to initiate trade talks with Washington.
China, for its part, is shoring up support in Southeast Asia. President Xi is scheduled to visit Vietnam, Malaysia, and Cambodia next week to strengthen economic ties and present a united front against what it views as American protectionism.
Despite global backlash and market volatility, Trump’s top officials remain unwavering. Commerce Secretary Howard Lutnick posted on social media, “The Golden Age is coming. We are committed to protecting our interests, engaging in global negotiations, and exploding our economy.”
Still, with international criticism mounting and domestic industries suffering from disrupted supply chains and rising input costs, analysts warn that the longer the trade war drags on, the greater the risks to the global economy.
“Unless both sides pull back, the world could be headed for a trade recession,” warned economist Linda Tran of the Global Policy Institute. “What began as tactical positioning is now a geopolitical economic struggle.”