China issued a firm warning on Tuesday, pledging to “fight to the end” if former U.S. President Donald Trump moves forward with a proposed 50% increase in tariffs. Beijing rejected appeals to abandon its retaliatory stance, escalating tensions between the world’s two largest economies and paving the way for a potential trade war showdown.
If both nations continue down this path, total new U.S. tariffs on Chinese imports could surge to 104% by Wednesday, putting Beijing in a difficult position. This pressure mounts as President Xi Jinping prepares to meet with Spanish Prime Minister Pedro Sanchez, ahead of his diplomatic tour across Southeast Asia—while global supply chains hang in the balance.
Analysts warn that Trump’s prior tariff hikes have already put intense strain on Chinese exporters, eating into profit margins and stifling growth. Any further escalation would signal a deepening of U.S. commitment to economic confrontation, with the underlying goal of sidelining China from the world’s largest consumer market.
“The U.S. is making a grave error by escalating tariffs,” China’s Ministry of Commerce said in a statement. “It reveals a pattern of economic coercion. If the U.S. remains stubborn, China will fight to the very end.”
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Trump has stated he will enforce the additional 50% tariffs on Chinese goods unless Beijing withdraws the 34% duties it placed on American products last week. These Chinese tariffs were a countermeasure to Trump’s earlier 34% reciprocal tariffs, which followed an initial 20% levy imposed earlier in the year. Altogether, these actions would raise the average U.S. tariff on Chinese goods to 76%.
“At this point, it’s no longer about economics but about principles and national resolve,” said Xu Tianchen, senior economist at the Economist Intelligence Unit. “When China is already facing tariffs beyond 60%, another increase—even 50% or more—doesn’t change much practically.”
In response to the financial shockwaves triggered by Trump’s so-called “Liberation Day” tariff announcement, China has been mobilizing support for its economy. State-backed firms have pledged to increase investments, listed companies are announcing share buybacks, and the central bank has offered liquidity support to Central Huijin following its market intervention.
Still, the risk of disruption looms large. If China’s exporters can’t swiftly shift to alternative markets, Trump’s tariff escalation could undermine the country’s post-COVID recovery—one that has been largely driven by international trade.
“Once tariffs surpass 35%, exporters start losing their entire profit margins,” said Dan Wang, China director at the Eurasia Group. “At that point, exporting to the U.S. becomes pointless—even if tariffs hit 1,000%, it wouldn’t matter because there would be no trade left.”
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Wang also emphasized that Europe is now China’s most lucrative market, as U.S. trade becomes increasingly volatile.
Looking ahead, President Xi is scheduled to meet Spain’s Prime Minister this Friday. Key topics are expected to include EU-China trade friction, particularly regarding Chinese electric vehicle exports, as well as strategies to respond to the broader U.S. tariff campaign.
Afterward, Xi will continue his diplomatic mission to Malaysia, Vietnam, and Cambodia—countries that previously benefited from Chinese companies relocating during Trump’s first term. However, they too now face growing U.S. tariff pressure.
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