China hikes tariffs on U.S. goods to 125% in latest escalation of trade war

China will raise tariffs on U.S. goods to 125% starting Saturday, up from the previously announced 84%, the country’s finance ministry said on Friday. The move comes in direct response to President Donald Trump’s latest tariff hike on Chinese imports, which pushed effective duties to 145%.

Despite announcing a 90-day tariff pause on dozens of countries to calm rattled financial markets, Trump simultaneously escalated trade tensions with Beijing, prompting immediate retaliation. China has responded to each of Trump's tariff hikes with its own, triggering concerns of a deepening tit-for-tat battle between the world’s two largest economies.

“Given that there is no longer any possibility of market acceptance for US goods exported to China under the current tariff levels, if the US side subsequently continues to impose tariffs on Chinese goods exported to the US, the Chinese side will pay no attention to it,” according to the statement.

The White House has clarified that Trump’s announcement of a 90-day tariff “pause” does not apply to China, which will see U.S. tariffs on its goods rise to 125%.

Markets remain on edge as the latest escalation adds to fears of a prolonged and damaging trade war. With both sides now imposing some of the steepest tariffs in recent history, analysts warn that the situation may worsen further if negotiations stall or future tariff increases are announced.