WASHINGTON (AP) — The tariff fight between the world’s two largest economies spiraled into greater peril Wednesday as President Donald Trump tried to narrow his global trade war into a direct — and risky — faceoff with Beijing.
As Trump reversed his larger “reciprocal” tariffs on most of the world in the face of recession fears, he nonetheless hiked his tariffs on China once again — to 125%. The move locks the strategic rivals into a deepening standoff that endangers both their economies and interests around the world. The stakes are higher than ever, as the U.S. and China are already embroiled in competition on everything from artificial intelligence to monetary policy to overall global influence.
Each nation dares the other to blink first. But the rounds of escalation are raising concerns that the window for diplomacy has narrowed even further, while the economic pain on both economies intensifies.
Behind it all, as usual, geopolitics lurks — the concerns about regional and global security that are always in play when economic relations between two of the world’s most powerful nations turn aggressive.
“When you punch the United States of America,” said Karoline Leavitt, the White House press secretary, “President Trump is going to punch back harder.”
A back-and-forth approach
After Beijing responded to U.S. President Donald Trump’s 34% “reciprocal” tax on China with the same 34% rate on American goods, Trump raised the tariff by another 50 percentage points, only to be met by the same tariff hike by Beijing on Wednesday morning. U.S. products going to China are now to be taxed 84%.
Hours later, Trump declared that Chinese imports to the United States would be “immediately” taxed at 125%, citing “lack of respect that China has shown to the World’s Markets.”
“At some point, hopefully in the near future, China will realize that the days of ripping off the U.S.A., and other Countries, is no longer sustainable or acceptable,” Trump wrote on his Truth Social platform.
Treasury Secretary Scott Bessent insisted this had been Trump’s strategy all along and that Beijing has “shown themselves to the world as the bad actors.”
While the financial markets rebounded from their deepest lows at the news that China would be facing the brunt of Trump’s wrath, the real-world prospects of the intensifying trade war with China were still set to be significant.
On Wednesday, the U.S.-China Business Council urged the two leaders to “come to the table” and talk. “Targeted tariffs to encourage China to come to the negotiating table are one thing, but these sweeping tit-for-tat tariffs are in no one’s interests. They will significantly harm the global, U.S., and Chinese economies as well as American businesses, farmers, and consumers,” the council said.
Trump has left little room to negotiate an off-ramp with China, short of that country capitulating — which would be anathema to Chinese President Xi Jinping.
“Xi will not be forced into a call,” said Sun Yun, director of the China program at the Washington-based think tank Stimson Center. Only once in recent history, she noted, has a Chinese leader phoned the United States without invitation — after the 9/11 terrorist attacks. The trade tensions, if unchecked, could spill into other domains, she warned.
Craig Singleton, the senior China fellow at another Washington-based think tank, the Foundation for Defense of Democracies, agreed that a phone call from Beijing is “unlikely in this climate.”
“Each side believes time is on its side, which raises the risk that neither moves to de-escalate until real damage is done,” he said. “This is no longer about tariffs alone. It’s a test of wills.”
Both sides have their calculations
Before Trump’s announcement, Bessent called it “unfortunate that the Chinese actually don’t want to come and negotiate.”
“And I can tell you that this escalation is a loser for them,” Bessent said on Fox Business Network’s “Morning with Maria” on Wednesday. “Their exports to the U.S. are five times our exports to China. So, they can raise their tariffs. But, so what?”
China has its own calculations. Its leadership, overseeing the world’s second-largest economy, has vowed not to surrender to U.S. bullying.
While Trump’s higher-than-expected tariffs caught other countries by surprise, China says it has been prepared, having learned a lesson from its previous tariff dealings during Trump’s first term. In response to Trump’s several rounds of tariff raises, Beijing has responded swiftly each time with a package of tariff and non-tariff measures.
“We have been in a trade war with the United States for eight years and have accumulated rich struggle experience,” said an editorial by the ruling party’s flagship newspaper People’s Daily, dated Monday. The newspaper assured the Chinese public that “the sky will not fall.”
“Facing the impact of U.S. tariff bullying, we possess strong resilience,” the party newspaper said, citing the country’s reduced dependence on exports to the U.S. market and new measures to boost domestic consumption.
Since Trump imposed his first round of tariffs on China in 2018, Beijing’s leaders have developed a toolkit of tariffs, import curbs, export controls, sanctions, regulatory reviews and measures to limit companies from doing business in China. All are designed to inflict pain on the U.S. economy and businesses in response to any trade move by the U.S. government.
Melanie Hart, senior director of the Global China Hub at the Atlantic Council, said Beijing is now “throwing the entire toolkit against” the United States, blacklisting companies, hitting American farmers and cutting the nation off from critical minerals.
“They have a bunker that they’ve been building for this moment,” Hart said. “They’re in the bunker. And if I’m Xi Jinping, I’m feeling a lot more comfortable than Donald Trump today.”
But People’s Daily also made it clear that Beijing remains open to talks. “Faced with volatility and extreme pressure from the United States,” it said, “we have not closed the door to negotiations.”
The country’s official Xinhua News Agency, in an editorial, insisted as well that China doesn’t want a trade war — but can fight one.
“There are no winners in a trade war,” it said. “But China is not afraid of a trade war.”
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