On Friday, the Chinese finance ministry announced a significant escalation in its trade conflict with the United States by raising its tariffs on U.S. goods from 84% to 125%. This move is seen as a direct retaliation against the reciprocal tariffs imposed by U.S. President Donald Trump. The ministry emphasized that under the current tariff rates, there is virtually no market left for U.S. goods imported into China.
According to a statement translated by CNBC, the Chinese finance ministry remarked that if the U.S. continues to raise tariffs, it will lead to an economic situation that will be viewed as a "joke" in the history of the world economy. The ministry also indicated that Beijing would disregard any further tariff increases from the U.S. government.
In a related development, the Trump administration confirmed to CNBC that the effective tariff rate on Chinese imports now stands at an unprecedented 145%. This rate includes a new executive order that raised reciprocal tariffs to 125%, which is in addition to a combined 20% tariff on fentanyl-related products that was imposed earlier this year.
Despite the ongoing escalation, a spokesperson for China's commerce ministry reiterated that Beijing remains open to negotiating with the U.S. on equal terms. However, hopes for a resolution to the U.S.-China trade tensions have rapidly diminished as China has responded to U.S. tariffs with its own set of duties on American products and widespread restrictions on U.S. businesses operating in China.
U.S. Treasury Secretary Scott Bessent expressed concerns over China's willingness to negotiate, stating that they are the "worst offenders" in the international trading system. He highlighted that China has the most imbalanced economy in modern history and characterized the current escalation as detrimental to China's interests.
In light of the escalating trade conflict, Goldman Sachs has revised its forecast for China's GDP growth down to 4%. Analysts attribute this adjustment to the adverse effects of U.S.-China trade tensions, compounded by slower global economic growth. Although Chinese exports to the U.S. represent only about 3 percentage points of China's total GDP, the impact on employment is substantial, with an estimated 10 million to 20 million workers in China engaged in businesses that export to the United States.
In its latest statement, China reaffirmed its commitment to "resolutely counter-attack" and continue fighting against U.S. actions that infringe upon its interests. As the situation evolves, the international community is closely watching the developments in this high-stakes trade war.
The White House has yet to respond to requests for comments regarding these latest developments, leaving many to speculate on the future of U.S.-China trade relations.
