China's Finance Ministry announced on Friday that they will raise additional tariffs on US imports from 84% to 125%, per Reuters, from April 12.
"If the US continues to impose additional tariffs on Chinese goods exported to the US, China will ignore it," the ministry said and added:
"If the US insists on continuing to infringe upon China's interests in a substantive way, China will resolutely take countermeasures and fight to the end."
China's Commerce Ministry also came out with a statement, urging the US to take a big step forward in eliminating the so-called "reciprocal tariffs" and completely correct its wrong practices. "China firmly opposes, condemns the US' wanton unilateral tariff measures, has taken resolute countermeasures to safeguard own rights and interests," the statement read.
Market reaction
US stock index futures turned south following this development. After having gained more than 1% earlier in the day, the S&P 500 futures were last seen rising 0.35%.
In the meantime, the US Dollar (USD) stays under heavy selling pressure. At the time of press, the USD Index was losing 1.1% on the day at 99.80.
Finally, Gold continues to gather strength and trades at a new record-high above $3,210 as the deepening trade conflict boost the safe-haven demand.
US-China Trade War FAQs
Generally speaking, a trade war is an economic conflict between two or more countries due to extreme protectionism on one end. It implies the creation of trade barriers, such as tariffs, which result in counter-barriers, escalating import costs, and hence the cost of living.
An economic conflict between the United States (US) and China began early in 2018, when President Donald Trump set trade barriers on China, claiming unfair commercial practices and intellectual property theft from the Asian giant. China took retaliatory action, imposing tariffs on multiple US goods, such as automobiles and soybeans. Tensions escalated until the two countries signed the US-China Phase One trade deal in January 2020. The agreement required structural reforms and other changes to China’s economic and trade regime and pretended to restore stability and trust between the two nations. However, the Coronavirus pandemic took the focus out of the conflict. Yet, it is worth mentioning that President Joe Biden, who took office after Trump, kept tariffs in place and even added some additional levies.
The return of Donald Trump to the White House as the 47th US President has sparked a fresh wave of tensions between the two countries. During the 2024 election campaign, Trump pledged to impose 60% tariffs on China once he returned to office, which he did on January 20, 2025. With Trump back, the US-China trade war is meant to resume where it was left, with tit-for-tat policies affecting the global economic landscape amid disruptions in global supply chains, resulting in a reduction in spending, particularly investment, and directly feeding into the Consumer Price Index inflation.
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