BEIJING/WASHINGTON/LONDON: Beijing increased its tariffs on U.S. imports to 125% on Friday, hitting back against President Donald Trump’s decision to raise duties on Chinese goods and upping the stakes in a trade war that threatens to upend global supply chains.
The retaliation intensified global economic turmoil unleashed by Trump’s tariffs. U.S. stocks ended a volatile week higher, but the safe haven of gold hit a record high during the session and benchmark U.S. 10-year government bond yields posted their biggest weekly increase since 2001 alongside a slump in the dollar, signaling a lack of confidence in America Inc.
One U.S. survey of consumers showed inflation fears have mounted to their highest since 1981, while financial institutions have been forecasting an ever greater risk of recession.
Trump downplayed the market turbulence, predicting the dollar would strengthen and saying many tariffs could settle in around 10% once the United States cut trade deals with all the countries that want to negotiate.
“When people understand what we’re doing, I think the dollar will go way up,” he told reporters aboard Air Force One late on Friday. “The bond market’s going good. It had a little moment but I solved that problem very quickly.”
The White House has said more than 75 countries have sought negotiations and that future deals would bring certainty.
India and Japan are among the powers to have advanced toward trade talks, but generally foreign leaders have puzzled over how to respond to the biggest disruption to the world trade order in decades.
The tit-for-tat tariff increases by the U.S. and China stand to make goods trade between the world’s two largest economies impossible, analysts say. That commerce was worth more than $650 billion in 2024.
“The president made it very clear: When the United States is punched, he will punch back harder,” White House Press Secretary Karoline Leavitt told reporters on Friday.
The dollar slid and a sell-off intensified in U.S. Treasuries, the world’s biggest bond market, as gold climbed.
The price decline in the U.S. 10-year Treasury note. decline drove its yield – which moves opposite to the price and is critical for determining interest rates on mortgages – to a two-month high. On the week, its yield has climbed nearly half a percentage point.
