President Donald Trump defended his escalating tariff policy and asserted that the U.S. was “doing well” even as Beijing announced a sharp increase in taxes on U.S. goods to 125%.
The move marks a deepening trade war between the world’s two largest economies, putting global financial markets into new turmoil.
Investors responded quickly, dumping U.S. government bonds, triggering a drop in the dollar and sending out stock price fluctuations. The latest turmoil came after Trump announced last week that import taxes were imposed on several trading partners. Although the government subsequently reduced these tariffs to 10% in 90 days, the tax on Chinese goods was levied, prompting Beijing to retaliate quickly.
“We’re doing a very good job in tariff policy,” Trump wrote on his truth social platform after China’s announcement. “It’s very exciting for the United States and the world!!! It’s developing rapidly.” The White House later said Trump was optimistic about a trade deal with China, noting that 15 other countries have offered quotes “on the desktop” during the tariff moratorium. Press Secretary Karoline Leavitt stressed that “the president is very clear that when the United States is punched, he will work harder.”
Punitive tariffs have increased in the past week. Chinese President Xi Jinping first resolved tensions on Friday, April 12, saying China is “not afraid” and urged the EU to “jointly resist unilateral bullying.” His comments were in talks with Spanish Prime Minister Pedro Sanchez.
After Xi Jinping’s speech, China’s Ministry of Commerce announced that the new 125% tariff on U.S. goods will take effect on Saturday, April 12. The United States raised tariffs on Chinese imports earlier, raising them to 145%. A spokesman for China’s Ministry of Commerce blamed the United States entirely on the current deadlock and rejected Trump’s approach as a “digital game” that “will be a joke.” However, China’s finance ministry added that tariffs will not rise further, in fact, acknowledging the current levels make the most impractical imports.
Despite the harsh remarks, Trump told reporters that he still hopes to reach an agreement with Xi Jinping. “He has been my friend for a long time. I think we will end up doing something for something really good in both countries,” he said. However, U.S. officials said they expect XI to take the next step of reconciliation.
As the economic deadlock continues, the Trump administration is under increasing pressure. Bond yields rose again, Friday, April 11, reflecting investor concerns and a lower demand for what is often considered a safe asset. The White House said there is no evidence that China is selling its massive U.S. fiscal securities, a move that would increase the U.S. government borrowing costs.
The Fed also puts pressure on warns that Trump’s tariff strategy could lead to higher inflation and lower economic growth. Economists warn that prolonged U.S.-China trade disruption could lead to higher prices for consumers and increase the risk of a global recession.
Swissquote Bank analyst Ipek Ozkardeskaya told AFP that the current tariff levels are “so high that they make no sense anymore”, but added that China seems willing to go “as needed”. While the international community remains cautious, EU leaders are preparing for upcoming talks with China, including a July summit to mark 50 years of EU-China relations. EU Trade Commissioner Maros Sefcovic is also planning to meet with U.S. officials on Monday.
European Commission President Ursula von der Leyen told Financial Times The group is equipped with “a broad range of countermeasures” including possible tariffs on digital services that could affect major U.S. technology companies.
