China’s Ministry of Finance announced a significant retaliation to the United States’ recent trade moves, increasing tariffs on US goods to 84%, up from 34%. The move came shortly after President Donald Trump’s 104% tariffs on Chinese imports came into effect on Wednesday — a figure that was later increased to 125%.
Trump defended the decision, claiming the 21% hike was “based on the lack of respect” shown by China and declared the new tariffs “effective immediately.”
Beijing Urges Global Unity Against US Measures
In response, Beijing urged countries to unite against what it referred to as Trump’s “trade tyranny.” An editorial in the state-run China Daily called for solidarity, stating, “Global unity can triumph over trade tyranny.” The paper also emphasized Beijing’s cooperation with nations such as Japan, South Korea, and other Asian economies.
A separate editorial urged the European Union to stand with China to “uphold free trade and multilateralism.”
Markets React as Tensions Escalate
European markets saw immediate drops following China’s tariff announcement. The FTSE 100 fell by 3.3% and Germany’s Dax dropped 4%.
Trump later responded via his Truth Social account, stating that the US would increase tariffs on China to 125%.
“At some point, hopefully in the near future, China will realise that the days of ripping off the USA, and other Countries, is no longer sustainable or acceptable,” Trump wrote.
He also announced a 90-day pause on higher tariffs for numerous countries — but notably excluded China. Trump said the delay was granted to nations that had not “at my strong suggestion, retaliated in any way, shape, or form against the United States.”
China Decries “Bullying Practices” Amid Economic Struggles
“Beijing firmly opposes and will never accept such hegemonic and bullying practices,” said Lin Jian, a spokesperson for China’s foreign ministry.
The tariffs arrive at a critical time for China’s economy, which continues to struggle with weak domestic consumption and relies heavily on exports for growth. Chinese businesses are now racing to adapt, though options are limited due to the global scope of Trump’s tariffs.
“These sweeping tariffs will shrink already razor-thin profit margins,” said the owner of a Chinese logistics business involved in e-commerce freight, who requested anonymity. “Higher tariffs raise costs for freight forwarders like us, as well as for factories, companies, and sellers. It just means everyone earns less.”
Businesses Sound Alarm Over Unsustainable Costs
Dan Wang of the Eurasia Group consultancy warned that tariffs above 35% “will wipe out all the profits that Chinese businesses make when exporting to the US or South East Asia.” She noted that since the pandemic, exports have accounted for 20% to 50% of China’s economic growth. “Growth is going to be much lower,” she added.
According to Chinese blogger Liu Hong, a senior editor at state-run Xinhua news, Beijing is considering retaliatory moves such as banning Hollywood films and suspending cooperation on fentanyl with the US.
But these actions bring little relief to Chinese firms already reeling from the US measures. Fuling, a major producer of disposable tableware for fast food chains like McDonald’s and Wendy’s, said the new tariffs would “significantly impact” their business. In 2023 and the first half of last year, nearly two-thirds of Fuling’s revenue came from the US.
Indonesian Factories Also Hit by US Tariffs
Fuling attempted to offset the US tariffs by opening a factory in Indonesia in late 2024. However, even these operations now face a 32% levy due to the latest American tariffs.
Chinese exporters now face a tightening vise, as most countries where supply chains have shifted — including Vietnam, Indonesia, and Cambodia — have also been targeted.
“Any tariff upwards of 35% will wipe out all the profits,” Dan Wang reiterated.
Global Fallout and Fears of Recession
Indonesia was not spared in Trump’s sweeping announcement of expansive global tariffs, which he claimed would “allow the US economy to flourish.”
However, the global economic fallout has been swift. Economists are now warning of the possibility of a global recession. The tariffs have rattled world markets and drawn backlash from influential figures, including billionaire CEOs such as Elon Musk — a known Trump ally.
While Beijing has not closed the door on dialogue, Trump has not spoken to Chinese leader Xi Jinping since returning to office.
American Business Groups Express Concern
The American Chamber of Commerce in China warned of the deep economic risks in a letter to its members.
“This level of upheaval is unprecedented, and it remains unclear how the current measures will benefit consumers in either nation or the broader economy,” read the note signed by Chair Alvin Liu and President Michael Hart.
Uncertainty Looms for Chinese Freight and Exporters
“The tariffs are aimed at suppressing China,” said the manager of a Chinese freight company, who declined to be named. He emphasized that many Chinese companies had moved operations to Southeast Asia — places now affected by the same tariffs.
The Tianjin-based company is currently negotiating with American clients to share some of the costs. “Every case is different, but overall, the impact has been quite substantial,” the manager said.
Wu Changchun, another freight company manager operating between China and Cambodia, reported a noticeable decline in freight volume. He added that several construction projects in Cambodia have also been halted since the tariffs were introduced.
“If the tariffs were at 10% or 20%, businesses might still be able to absorb the cost by optimising supply chains, cutting margins and sharing the burden. Trade could still go on… [But at 104%] that’s no longer something trade-offs can fix,” said Wu, general manager at Maritima Maruba.
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