China Fires Back With 125 Per Cent Tariff On US, Triggers Fresh Shockwaves In Global Markets

<p>The ongoing trade war between the US and China took a sharper turn on Friday after Beijing raised tariffs on American goods to 125 per cent, retaliating against former President Donald Trump&rsquo;s latest tariff hike. The intensification of the standoff threatened to destabilise the already vulnerable global supply chains.</p>
<p>In a move signalling both defiance and restraint, China raised its tariffs again on Friday. Its finance ministry condemned the US actions as &ldquo;completely unilateral bullying and coercion.&rdquo; Although Beijing hinted this could be its final round of tariff retaliation, it also warned that other forms of response could follow, reported Reuters.</p>
<p>&ldquo;If the US truly wants to have talks, it should stop its capricious and destructive behavior,&rdquo; said Liu Pengyu, spokesperson for China&rsquo;s US embassy. &ldquo;China will never bow to maximum pressure of the US&rdquo;.</p>
<p>UBS analysts interpreted Beijing&rsquo;s response as an acknowledgement that economic decoupling between the two powers may already be complete.</p>
<h3>Markets Rattle As Tariff Tensions Reach New Highs</h3>
<p>The market’s reaction was swift. While US equities managed to close the week on a high note, gold prices soared to a new peak and yields on benchmark 10-year Treasuries recorded their steepest weekly climb since 2001. Simultaneously, the US dollar weakened, signalling growing investor anxiety about the state of the American economy.</p>
<p>A recent consumer sentiment survey underscored this concern, with inflation fears hitting their highest level since 1981. Financial analysts, meanwhile, have begun sounding louder alarms over a potential recession.</p>
<p>Unfazed, Trump attempted to ease market jitters. &ldquo;When people understand what we’re doing, I think the dollar will go way up,&rdquo; he said aboard Air Force One on Friday. &ldquo;The bond market’s going good. It had a little moment but I solved that problem very quickly.&rdquo;</p>
<p>Following Trump’s announcement of what he termed &ldquo;reciprocal tariffs,&rdquo; a sharp selloff rocked the $29 trillion Treasury market. Analysts believed that the shock prompted the administration to temporarily pause the new tariffs&mdash;excluding China&mdash;for a 90-day window.</p>
<p>Since then, the White House claims over 75 countries have sought trade talks with the US, suggesting future bilateral agreements could offer some stability. Talks are reportedly advancing with major economies like India and Japan, though global leaders remain unsure how to handle the largest shakeup in international trade in decades.</p>
<p>Experts warn that continuous tit-for-tat tariffs between the US and China could cripple the flow of goods between the two nations&mdash;worth over $650 billion in 2024 alone.</p>
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<p>&ldquo;We pretty much can do what we want to do, but we want to be fair,&rdquo; Trump said. &ldquo;We can set the tariff and they can choose not to deal with us or they can choose to pay it.&rdquo; However, economists clarifed that while tariffs can hurt exporters by making their products less competitive, the actual cost burden typically falls on importers&mdash;and eventually consumers.</p>
<p>Despite claiming to be at ease with the tariff hikes, Trump suggested a deal with Beijing was not off the table, even as he lauded Chinese President Xi Jinping. Yet, neither side has shown a clear willingness to de-escalate.</p>
<p>&ldquo;The president made it very clear: When the United States is punched, he will punch back harder,&rdquo; said White House Press Secretary Karoline Leavitt.</p>
<p>The markets responded by selling off both US bonds and the dollar. Bond yields surged amid speculation that China might be liquidating its US Treasury holdings. Treasury Secretary Scott Bessent is said to be keeping a close watch on these developments.</p>
<p>Meanwhile, fresh inflation data for March painted a mixed picture. While overall inflation hasn&rsquo;t surged, industrial metal prices&mdash;affected by tariffs on imports like steel and aluminium&mdash;have started rising.</p>
<p>Inflation expectations over the next year jumped to 6.7 per cent&mdash;the highest since 1981&mdash;up from 5.0 per cent just a month ago.</p>