China Raises Tariffs on US Imports to 125% Amid Trade Conflict

China’s finance ministry has announced a significant escalation in the ongoing trade conflict with the United States, raising tariffs on select US imports to 125%. This move comes just two days after Beijing increased duties to 84%, mirroring Washington’s recent tariff hikes. The decision took immediate effect and was accompanied by strong statements from Chinese officials, who framed the measures as a defensive response to what they described as unilateral economic aggression by the US.

The Chinese foreign ministry labeled the US actions as “hegemonic” and “bullying,” while the commerce ministry termed the move a “mistake on top of a mistake.” Beijing stated that it would not escalate further but warned against continued US tariff pressure, describing the latest hike as contrary to international economic norms. The Chinese commerce ministry also noted that US tariffs have turned into “a numbers game with no practical significance in economics.”

The market reaction to these developments was mixed, reflecting uncertainty about the potential impact on global trade and capital flows. Bitcoin, which had dipped approximately 0.60% before the announcement, briefly recovered but ultimately remained near flat at $81,292.68 as of press time, down 0.07% intraday. This indecision highlights the ongoing debate over Bitcoin’s role as a macro hedge, with some investors treating it as a store of value during geopolitical tension, while others view it as a high-beta asset sensitive to broader market sentiment.

In contrast, gold rose steadily, gaining 0.35% over the session. The metal’s upward momentum continued past the announcement, consistent with previous episodes of trade friction. Gold’s price behavior suggested capital rotation out of equities and into hard assets that are less vulnerable to trade volume disruption. US Treasury bonds also attracted demand, with prices on the 10-year bond climbing by 0.12%, driving yields lower and reflecting investor caution. Falling yields often signal expectations for slower economic growth or future Federal Reserve rate cuts.

Oil posted the most notable downside move across assets, with prices falling 1.02% as traders recalibrated demand expectations under the assumption that extended trade disputes could constrain global industrial activity. The move reflects sensitivities to macroeconomic indicators that suggest trade barriers could reduce energy consumption, particularly in manufacturing-heavy regions. Meanwhile, Chinese bonds mainly remained unchanged, with the proxy 10-year Chinese government bond posting a marginal increase of just 0.01%, hinting at either a fully priced-in market or expectations that the People’s Bank of China may intervene to ensure currency stability.

The tariff increase follows a pattern of reciprocal moves that began with the Trump administration’s sweeping import tax policies. Since the start of the trade confrontation, Beijing has matched Washington’s escalation with near-equal tariff hikes. The cumulative increases have driven both sides’ duties to historically elevated levels, with a stated 125% tariff now becoming the baseline for many products. Whether the tariff ceiling holds or triggers new rounds of retaliation remains uncertain. For now, investors appear divided in their interpretation of what elevated tariffs signal, either an inflection point in trade relations or an entrenched state of economic separation between the world’s two largest economies.

While commodities like gold and bonds continue to absorb geopolitical risk in traditional ways, Bitcoin’s identity straddles both ends of the spectrum. Its lack of clear directional conviction may reflect broader hesitancy to assign it a fixed role in macroeconomic crises, at least until clearer signals emerge from either central banks or geopolitical actors.