Trump escalates China trade war with 125% tariff increase
Donald Trump has decided to increase tariffs on China to 125 per cent. Meanwhile, the American president announced a 90-day suspension of tariffs for other countries.
What do you need to know?
- Raising tariffs on China: Donald Trump has decided to immediately raise tariffs on China to 125 per cent. The rationale behind this decision is the perceived lack of respect that China has shown towards global markets.
- Suspension of tariffs for other countries: The U.S. president announced a 90-day suspension of tariffs for over 75 countries that have reached out to American representatives for trade negotiations.
- Reduction of mutual tariffs: During the suspension period, mutual tariffs will be reduced to 10 per cent, which also takes immediate effect.
"Based on the lack of respect that China has shown to the World’s Markets, I am hereby raising the Tariff charged to China by the United States of America to 125%, effective immediately," the American president announced on Truth Social.
"At some point, hopefully in the near future, China will realise that the days of ripping off the U.S.A., and other Countries, is no longer sustainable or acceptable," he emphasised.
Trump also stated that other countries could count on the suspension of newly introduced tariffs. "Conversely, and based on the fact that more than 75 Countries have called Representatives of the United States, including the Departments of Commerce, Treasury, and the USTR, to negotiate a solution to the subjects being discussed relative to Trade, Trade Barriers, Tariffs, Currency Manipulation, and Non Monetary Tariffs, and that these Countries have not, at my strong suggestion, retaliated in any way, shape, or form against the United States, I have authorized a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10%, also effective immediately," Trump declared.
What does this mean for U.S.-China relations?
The decision to impose 125 per cent tariffs is another step in escalating trade tensions between the U.S. and China. Previously, China had missed the deadline set by President Trump to withdraw retaliatory tariffs, prompting the U.S. to take decisive action and introduce 104 per cent tariffs on Tuesday. By Wednesday, Trump had increased them to 125 per cent.
China is the largest trading partner of the U.S. in terms of goods import – at its peak, Americans imported goods from China worth over $500 (£390) billion a year. Trade relations between the United States and China have long been characterised by a significant deficit on the U.S. side. In 2024, the value of American exports to China was about $143.5 (£112) billion, while imports from China reached $438.9 (£343) billion, resulting in a trade deficit of $295.4 (£231) billion. The USA exports to China agricultural goods (like soybeans and corn), machinery, electronics, and industrial products – albeit on a much smaller scale.
The U.S. has repeatedly accused China of, among other things, artificially devaluing the yuan, providing state support to domestic companies, limiting access to the Chinese market for American businesses, intellectual property theft, and forced technology transfer. All these issues eventually led to a deep crisis of trust, culminating in the trade war that began in 2018 during Donald Trump's first presidency.
The Trump administration began to gradually impose high tariffs on Chinese products – eventually impacting goods worth hundreds of billions of dollars. China responded with retaliatory tariffs. Although some observers hoped for a quick agreement, tensions lasted for months and had real consequences for global trade, supply chains, and financial markets. In January 2020, the so-called "phase one" agreement was signed, wherein China committed to increasing purchases of American products, particularly agricultural and energy goods. However, the COVID-19 pandemic quickly sidelined these commitments.
During Joe Biden's presidency, the rhetoric towards China softened, although strategic mistrust remained. The United States maintained many tariffs imposed by Trump while simultaneously initiating policies to limit China's access to advanced technologies – particularly semiconductors and artificial intelligence. Alongside this, there is an ongoing competition for influence in Asia, dominance in the high-tech sector, and control over key resources.
Imposing a 125-percent tariff means that the value of the tariff exceeds the value of the goods themselves. In practice, if an importer in the U.S. wants to import a product from China valued at 100 dollars, they will pay an additional 125 dollars in tariff, totaling 225 dollars.
