Key takeaways:
- The Trump administration has raised tariffs on Chinese imports to at least 145%, significantly escalating the trade war with China.
- The higher tariff rate combines Trump’s recent 125% “reciprocal” tariff hike with a previous 20% levy on China linked to fentanyl trafficking concerns.
- The move threatens to disrupt global supply chains and increase costs for US businesses and consumers reliant on Chinese goods.
- China has vowed to retaliate, raising fears of further escalation and potential damage to economic growth prospects.
Introduction
In a sharp escalation of the trade war with China, President Donald Trump’s administration has increased tariffs on Chinese imports to a staggering 145%, according to CNBC. The higher tariff rate incorporates Trump’s recent hike to 125%, announced Wednesday as part of a slate of “reciprocal” tariffs, combined with a previous 20% levy imposed on Chinese goods over fentanyl trafficking concerns. The move comes amid a flurry of tariff adjustments by the White House, raising risks for:
- Disrupted global supply chains
- Higher costs for US businesses reliant on Chinese imports
- Increased inflation weighing on American consumers
- Retaliatory actions by Beijing and further escalation of tensions
Detailed Analysis
The increase in tariffs targeting Chinese goods follows an initial round of Trump administration actions last week that roiled markets worldwide. On April 2, Trump announced plans for “reciprocal” tariffs of 10-25% on imports from dozens of US trading partners in response to perceived unfair trade practices.
While the White House initially paused most country-specific tariff hikes for 90 days on Wednesday, it singled out China for punitive measures. Trump authorized raising tariffs on $523 billion worth of Chinese imports to 125%, up sharply from the previous 84% rate.
“The trade war is now turning into a direct confrontation between the U.S. and China,” said analysts at Rabobank in a research note.
Thursday’s revelation of an at least 145% combined tariff on Chinese goods adds another dimension to the deepening trade battle. According to the White House, the substantial increase factors in Trump’s earlier 20% duty on imports from China related to the fentanyl crisis 1.
“It depends on how narrowly the tariff is applied or how broadly it’s applied, but generally if you get north of a triple-digit tariff, you are cutting off most trade,” said Erica York of the Tax Foundation’s Center for Federal Tax Policy 2.
For American businesses and consumers reliant on products from China, the higher tariffs could lead to supply chain disruptions and increased costs passed on by companies. The Tax Foundation estimates the new tariffs represent a $171.6 billion tax increase for 2025 3.
China, for its part, swiftly imposed retaliatory tariffs of 84% on US imports Wednesday and has signaled it will not back down from escalating confrontations. Beijing said it will “follow through to the end” if the US insists on its current course 4.
Conclusion
Amid the tit-for-tat tariff increases between the world’s two largest economies, fears are mounting over potential economic fallout. The triple-digit US levies on Chinese imports threaten to severely disrupt global supply chains and trade relationships that have been built over decades.
While the Trump administration may aim to correct perceived imbalances through its aggressive trade tactics, the heightened tensions introduce significant risks for American businesses and consumers. As UBS economists warned in a recent note, “It is not totally clear what the endgame is for the US side” 5.
With both nations digging in their heels, the likelihood increases that the trade war further escalates – a lose-lose scenario that could undermine economic growth prospects globally.
References
1 Thomson Reuters (April 10, 2025). “Chinese goods subject to tariffs of at least 145%, White House says”. CBC News. Retrieved April 10, 2025.
2 Sean Conlon (April 10, 2025). “Trump’s triple-digit tariff essentially cuts off most trade with China, says economist”. CNBC. Retrieved April 10, 2025.
3 Tax Foundation (Accessed April 10, 2025). “Preliminary Details and Analysis of President Trump’s ‘Reciprocal’ Tariffs”. Retrieved April 10, 2025.
4 Thomson Reuters (April 10, 2025). “Chinese goods subject to tariffs of at least 145%, White House says”. CBC News. Retrieved April 10, 2025.
5 Myles Udland (April 8, 2025). “Markets are wrestling with a mystery: What exactly does Trump want from tariff talks?”. Yahoo Finance. Retrieved April 10, 2025.
