China raises tariffs on US goods to 125% as trade war escalates

China said on Friday it would raise its tariffs on US goods to 125 per cent in a further escalation of a trade war that threatens to bring exports to a halt between the world’s two biggest economies.

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Beijing’s retaliation sparked fresh market volatility, with stocks seesawing, gold prices surging and US government bonds under pressure.

In a message on social media on Friday morning, US President Donald Trump continued to insist that “we are doing really well on our tariff policy.” “Very exciting for America, and the World!!! It is moving along quickly,” he wrote.

But in a sign of investors’ worries about the health of the US economy under Trump's erratic stewardship, the dollar fell to a three-year low against the euro.

In Beijing, China's State Council Tariff Commission said new tariffs of 125 per cent on US goods would take effect Saturday, almost matching the staggering 145 per cent level imposed on Chinese goods coming into America.

A Commerce Ministry spokesperson said the United States bore “full responsibility for this”, deriding Trump's tariffs as a “numbers game” that “will become a joke”.

The Chinese finance ministry said tariffs would not go any higher because “there is no possibility of market acceptance for US goods exported to China” - an acknowledgement that almost no imports are possible at the new level.

Economists warn that the disruption in trade between the tightly integrated US and Chinese economies threatens businesses, will increase prices for consumers, and could cause a global recession.