President Donald Trump has further intensified the trade conflict with China by confirming that tariffs on Chinese goods have reached 145%, a level some experts are likening to a de facto trade embargo. On Thursday, the White House confirmed to CNBC that tariffs on Chinese imports now stand at 145%, following the addition of a new 125% tariff to an existing 20% one from late February, which had been "forgotten."
Despite the escalating situation, Trump maintains a conciliatory tone towards his Chinese counterpart, Xi Jinping, expressing confidence that both nations will eventually achieve "something very beneficial." "We'll see what happens with China. We'd love to reach an agreement," Trump stated during a press event with his cabinet. He reiterated his close relationship with Xi, which fuels his optimism for a resolution. "I have great respect for President Xi Jinping. He has, at heart, been my friend for a long time. And I believe we will eventually achieve something very beneficial for both countries," he asserted, as reported by American media outlets.
Trade Truce with Notable Exceptions
The strengthening of tariffs on China comes just a day after Trump announced a partial 90-day tariff truce with other trading partners, excluding China from this temporary relief. This decision is reportedly driven by what the U.S. administration sees as an inadequate response from Beijing regarding fentanyl trafficking and recent Chinese trade retaliations. "All we're doing is setting things right," stated the U.S. president. In this context, Trump criticized China's international trade policies: "They've taken advantage of our country for too long. They've swindled us more than anyone else."
Financial Markets React
The announcement had an immediate impact on Wall Street, with major indices experiencing declines. The S&P 500 plunged by 4%, while Texas crude oil prices fell below $60 per barrel. The yield on 10-year bonds also took a sharp turn, erasing gains made after a positive inflation report. The tariff level reached, according to analysts like Preston Caldwell, senior economist at Morningstar Research Services, represents an almost total blockade of bilateral trade. "It's very unlikely that many customers will be willing to purchase Chinese products if they have to pay a 145% surcharge," Caldwell noted. "The result is that companies have a strong incentive to divert their trade from China to other countries in the region," he added.
TikTok and the Influence of Tariffs
The tariff pressure has also affected other areas, such as the failed agreement allowing TikTok to continue operating in the U.S. "We had a deal with TikTok, practically not a deal, but pretty close, and then China changed it because of the tariffs," Trump revealed during an informal conversation aboard Air Force One. "If I had slightly reduced the tariffs, they would have approved the deal in 15 minutes, which shows the power of tariffs," he added, implicitly acknowledging how his tariff strategy influences bilateral relations. Since the start of his second term, Trump has tried to force TikTok to separate from its Chinese parent company, ByteDance, in compliance with a law passed by Congress that took effect on the day of his inauguration. In this framework, he signed an executive order extending the adaptation period by 75 days and recently issued another similar extension.
Beijing's Warning and Escalating Tensions
Meanwhile, the Chinese government has reiterated its "firm will" and "ample resources" to respond "resolutely" if Washington continues its economic pressure strategy. In statements collected by state media, Xi Jinping's administration made clear its readiness to keep confronting Trump's measures. The U.S. president, showing no signs of moderation, insisted on his hardline stance against the Asian country: "At some point, hopefully in the near future, China will realize that the era of cheating the United States and other countries is no longer sustainable or acceptable," he wrote on his Truth Social platform.
Understanding the US-China Trade Conflict
Why did the US increase tariffs on China to 145%?
The US increased tariffs as part of its strategy to pressure China to address issues such as fentanyl trafficking and retaliatory trade practices, which the US administration considers inadequate.
What impact did the tariff increase have on financial markets?
The tariff increase led to declines in major indices on Wall Street, with the S&P 500 dropping 4%, oil prices falling below $60, and bond yields reversing gains.
How has TikTok been affected by the US-China trade tensions?
The tariff pressures complicated a potential agreement for TikTok to continue operating in the US, as the Chinese response to tariffs influenced the negotiations.