The escalating trade war between the United States and China reached new heights in April 2025, with both nations imposing unprecedented tariffs on each other’s goods, rattling global markets, and prompting urgent calls for negotiations.
Triggered by President Donald Trump’s aggressive trade policies, the tit-for-tat tariff hikes have rattled the supply chains, raised fears of a global recession, and exposed deep divisions over the future of bilateral trade.
Here’s a comprehensive update on the latest developments in this high-stakes economic standoff.
Escalation of tariffs
The current phase of the trade war began on April 2, 2025, when US President Donald Trump signed Executive Order 14257, declaring a national emergency over persistent US trade deficits and imposing a 10% baseline tariff on imports from all countries, alongside higher ‘reciprocal’ tariffs tailored to specific nations.
China faced an initial 104% tariff, combining an 84% reciprocal rate and a 20% levy tied to its role in supplying fentanyl precursors.
In response, China’s Ministry of Finance raised tariffs on US goods to 84% on April 10, prompting the U.S. to escalate its tariffs to 125% on April 11, effective immediately. China retaliated the next day, hiking duties on American imports to 125%, a move Beijing signaled as its ceiling to avoid rendering trade unfeasible.
On April 16, a White House fact sheet referenced a potential 245% tariff on certain Chinese goods, combining the 125% reciprocal tariff, the 20% fentanyl tariff, and existing 100% Section 301 tariffs from the Biden era on products like electric vehicles.
However, the White House later clarified that critical electronics, such as semiconductors, would revert to the 20% fentanyl tariff, easing some pressure on tech sectors. China’s Commerce Ministry dismissed the 245% figure as a ‘meaningless numbers game,’ vowing to fight the trade war ‘to the very end’ if the US continues to infringe on its interests.
Mixed signals on negotiations
Amid the tariff escalation, conflicting narratives have emerged about the state of US-China trade talks.
On April 19, President Trump claimed that American and Chinese teams were ‘actively discussing’ a deal, predicting an agreement within three to four weeks. He reiterated on April 24 that China had reached out ‘multiple times’ since the tariffs were imposed, expressing optimism about a deal to avoid further hikes.
However, China’s Foreign Ministry spokesperson Guo Jiakun called these claims ‘fake news,’ asserting that no consultations or negotiations on tariffs had occurred. Commerce Ministry spokesperson He Yadong urged the US to eliminate all unilateral tariffs, stating, ‘The person who tied the bell must untie it,’ signaling Beijing’s reluctance to negotiate without concessions.
Despite the public discord, signs of de-escalation have surfaced.
On April 24, reports indicated that China quietly rolled back tariffs on certain US semiconductors, pharmaceuticals, medical gear, and chemicals, easing pressure on its tech and healthcare sectors.
The Chinese moves suggest that Beijing may be seeking to preserve critical supply chains while maintaining a defiant public stance. Mr. Trump, meanwhile, softened his rhetoric, stating on April 24 that the 145% tariff ‘won’t be anywhere near that high’ and emphasizing that he does not want tariffs to price goods out of reach for consumers.
Economic fallout
The tariff hikes have sent shockwaves through global markets. The Dow Jones Industrial Average plummeted after the April 2 announcement, regaining some ground after Trump’s 90-day pause on reciprocal tariffs for most countries (excluding China) on April 11.
However, the S&P 500 fell 3.5% on April 10 as fears of a US-China trade collapse grew. The US dollar weakened, and 10-year Treasury yields surged to over 4.5%, reflecting investor anxiety about the US economy.
China’s export-driven economy also faced strain, though a 12.4% export surge in March 2025, driven by pre-tariff shipments, bolstered growth at a 5.4% annual pace in Q1.
American businesses, particularly in semiconductors (e.g., Intel, Global Foundries) and agriculture (e.g., soybean farmers), are grappling with China’s retaliatory measures, including 125% tariffs and export controls on rare earths critical for US auto, energy, and defense industries. US consumers face rising costs, with goods from China now subject to a minimum 145% tariff, exacerbating inflation concerns. A University of Michigan report noted a fourth consecutive month of declining consumer confidence in April. Conversely, some US industries, like Gulf Coast shrimpers, welcome the tariffs as protection against cheap imports.
Global and Domestic reactions
The trade war has prompted varied responses.
Over 75 countries, including India, Japan, South Korea, and Vietnam, have initiated trade talks with the US to secure exemptions or lower tariffs during the 90-day pause, with India advancing toward a deal covering 19 categories, including farm goods and critical minerals.
The European Union, facing a 10% US tariff, paused its retaliatory levies for 90 days and announced free trade talks with the UAE to diversify supply chains.
Within the US, Democrats, led by Senators Elizabeth Warren and Chuck Schumer, criticized the tariffs for causing market volatility and potential insider trading, though they provided no evidence.
Treasury Secretary Scott Bessent called China’s escalation a ‘big mistake,’ arguing that Beijing’s reliance on US exports gives America the upper hand. White House Press Secretary Karoline Leavitt rejected calls for unilateral tariff reductions, emphasizing Trump’s resolve to ‘punch back harder.’
China, meanwhile, appointed Li Chenggang as its new trade negotiator on April 16, signaling a potential shift toward a more open negotiating style. Li, a veteran of China’s WTO accession, is seen as supportive of free trade, though Beijing appears to be firm on defending its interests.
Challenges ahead
The tariff war faces logistical hurdles.
US Customs and Border Protection reported a glitch in its tariff exemption system, delaying duties for goods in transit and highlighting the strain on federal infrastructure. The Trump administration is reportedly considering a task force, potentially including Vice President JD Vance and Treasury Secretary Bessent, to address supply chain disruptions if no deal is reached with China.
Analysts warn that the 145% US tariff and China’s 125% retaliation could halt the $650 billion trade flow between the two nations, with ripple effects on global supply chains for electronics, pharmaceuticals, and critical minerals. While Trump’s team sees tariffs as leverage to bring manufacturing back to the US, critics like Adam Posen of the Peterson Institute contend that China’s smaller export share to the US (one-fifth of US exports to China) limits Beijing’s leverage, making escalation risky for both sides.
As both nations navigate the economic brinkmanship, the path forward remains uncertain. Trump’s deadline for a deal, loosely set for mid-May, looms large, but China’s insistence on tariff rollbacks and the US’s hardline stance suggests a protracted conflict. For now, businesses, investors, and consumers brace for further volatility as the world’s two largest economies grapple for supremacy in a rapidly shifting trade landscape.