China warned Thursday that President Donald Trump's escalating trade war "will end in failure" as its 84% retaliatory tariffs on U.S. goods took effect, further deepening tensions between the world's two largest economies. The warning came hours after Trump announced a 90-day pause on higher tariffs for most U.S. trading partners-excluding China, which instead faces an increased levy of 125%.
"The U.S. cause doesn't win the support of the people and will end in failure," Chinese Foreign Ministry spokesperson Lin Jian said during a press briefing. While reiterating its opposition to confrontation, Beijing made clear it was prepared to respond forcefully. "We do not want a trade war, but we are not afraid of one," Lin added. "China will fight to the end."
The move marks a significant escalation in an already volatile trade conflict. Beijing's Commerce Ministry offered a less combative tone, stating, "The door to dialogue is open," while urging Washington to resolve differences based on "mutual respect, peaceful coexistence and win-win cooperation."
China's tariffs came in response to Trump's decision to hike U.S. tariffs on Chinese imports from 104% to 125%, after Beijing refused to withdraw its retaliatory measures. "At some point, hopefully in the near future, China will realize that the days of ripping off the USA and other countries is no longer sustainable or acceptable," Trump said.
Trump's decision to temporarily cap tariffs at 10% for other countries spurred a global market rally. On Wall Street, the Nasdaq surged 12.2%-its best day in 24 years-while the Dow jumped nearly 8%. Asian markets followed suit, with Taiwan's TAIEX up 9.2%, Japan's Nikkei rising 7.2%, and South Korea's Kospi gaining over 5%.
Still, analysts warned the broader economic outlook remains fragile. "The risks remain huge," said Holger Schmieding, chief economist at Berenberg. The World Trade Organization said the U.S.-China dispute could slash bilateral goods trade by up to 80%, with serious implications for global growth.
The European Union also announced a 90-day pause on its planned retaliatory tariffs against the U.S., which had been set to hit $23 billion worth of goods, including American agricultural exports. "We want to give negotiations a chance," European Commission President Ursula von der Leyen said.
Inside China, the damage is beginning to show. Chinese exporters selling through Amazon are weighing price hikes or exiting the U.S. market altogether, according to the country's largest e-commerce industry association. A China Daily editorial noted the tariffs would likely hit manufacturing investment and consumer sentiment, but emphasized that "kowtowing to the U.S.'s tariff bullying will gain it nothing."
Beijing is now turning to other trading partners in an effort to shore up its global economic position. Commerce Minister Wang Wentao said China would deepen ties with ASEAN and resume stalled electric vehicle negotiations with the EU. Meanwhile, Australia's defense minister rejected closer ties with Beijing, stating: "We're not about to make common cause with China."
Despite the economic strain, Trump dismissed fears of a recession. "Sometimes you have to take medicine," he said. But with Congress and markets rattled, his own officials appeared caught off guard. "It looks like your boss just pulled the rug out from under you," Rep. Steven Horsford (D., Nev.) told a U.S. trade official during a House hearing.
As both sides dig in, the pathway to resolution remains uncertain. Chinese officials insist sovereignty and development interests are non-negotiable. "Pressuring, threatening, and blackmailing are not the correct ways to deal with China," Commerce Ministry spokeswoman He Yongqian said. "We hope the U.S. will work with China."
