China’s finance ministry has raised tariffs on select US imports to 125%, matching the United States’ most recent escalation and signaling continued parity in the trade conflict.
The tariff adjustment, announced early Friday, comes just two days after Beijing raised duties to 84%, following Washington’s move to impose higher import taxes on Chinese goods.
The decision took effect immediately and was accompanied by sharply worded statements from Chinese officials who framed the measures as a defensive response to what they labeled unilateral economic aggression.
The Chinese foreign ministry described the US actions as “hegemonic” and “bullying,” while the commerce ministry called the move a “mistake on top of a mistake.”
Per BBC News, Beijing stated it would not escalate further but warned against continued US tariff pressure, describing the latest hike as contrary to international economic norms.
Beijing’s Commerce Ministry told the BBC that US tariffs have turned into
“A numbers game with no practical significance in economics[…] It will become a joke.”
Cross-Asset Response Reflects Diverging Risk Narratives
The market reaction reflected uncertainty about how deeply the tariff escalation would affect global trade and capital flows. While traditional safe-haven assets received modest inflows, risk assets moved unevenly.
Bitcoin, which had dipped approximately 0.60% before the announcement as broader risk assets sold off, briefly recovered after 9:00 A.M GMT but ultimately remained near flat at $81,292.68 as of press time, down 0.07% intraday.
The mixed response highlights an ongoing debate over Bitcoin’s role as a macro hedge. Some investors treat it as a store of value during geopolitical tension, while others view it as a high-beta asset sensitive to broader market sentiment. The indecision mirrors behavior seen during previous trade disputes, where crypto’s utility as a safe-haven asset remains context-dependent.
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. Prices on the 10-year bond climbed 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.
The uptick in demand aligns with a broader risk-off sentiment, especially in anticipation of further policy tightening or retaliatory economic measures. Still, it contrasts with recent declines in bond prices along with equities. The move, while modest, indicates a renewal in US bonds as a flight to safety after the sell-off earlier this week.
Oil Declines Sharply, Yuan Static
Oil posted the most notable downside move across assets. Prices fell 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. The proxy 10-year Chinese government bond posted 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. Such muted movement implies investors anticipate limited near-term volatility in foreign exchange markets despite the tariff escalation.
The S&P 500 (SPY proxy) slipped 0.63% in pre-market trading, reflecting cautious sentiment and a continued wholesale move out of equities.
Broader Trade Landscape
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.
Taiwanese President Lai Ching-te separately noted that Taiwan is engaged in early negotiations with Washington after a temporary pause reduced US tariffs on the island’s exports from 32% to a 10% baseline. Per BBC News, Lai stated that his government remains committed to securing favorable outcomes to protect industrial interests.
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.
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