China raises tariffs on U.S. goods to 125 percent as trade war deepens

Beijing punched back with tariffs of 125 percent on all U.S. goods on Friday in response to President Donald Trump’s tariff increases, sharply escalating the spiraling trade tensions between the United States and China.

The response underscored China’s decision to stand firm in the face of pressure from Washington and deepened the showdown between the world’s two largest economies.

“If the U.S. insists on substantively damaging China’s interests, China will firmly retaliate and fight to the end,” China’s State Council said in a statement.

The move came after Trump increased the levies on Chinese goods to 145 percent on Wednesday, while also announcing that the tariffs he had previously imposed on more than six dozen other countries would be fixed at 10 percent during a 90-day pause.

The State Council derided Trump’s move to continue ratcheting up the levies and said it would ignore further hikes. The tariffs are a “joke” and “no longer have any economic significance,” its statement said, because the current levels make U.S. exports to China not financially viable. The new Chinese tariffs, which increased from 84 percent, are effective Saturday.

Chinese leader Xi Jinping, in a meeting with Spanish Prime Minister Pedro Sánchez on Friday, stressed that trade wars have no winners and called for China and Europe to “jointly oppose unilateral bullying,” according to state media. European leaders also emphasized the damaging effects of uncertainty beyond the 90-day pause.

The market swings came after falls in the U.S. markets a day earlier. The S&P 500 fell 3.46 percent, and the tech-heavy Nasdaq composite index lost 4.26 percent on Thursday, while the narrower Dow Jones Industrial Average slid 2.54 percent. Those moves followed a White House statement that import duties on Chinese exports to the U.S. would be 145 percent.

The declines came just a day after a rally, when the same markets posted big gains and the S&P 500 had its biggest one-day jump since 2008.

Representatives from more than a dozen countries are seeking to negotiate new trade deals with the White House, The Washington Post reported. Trump will negotiate with some countries directly, while other senior administration officials will split up the rest, based in part on who has the best existing relationship with the representatives of a particular country. (Source: The Washington Post)