In response to the escalating trade tensions, China raised its tariffs on U.S. imports to 125% in April 2025, up from the previous 84% rate.12 This decisive action came after the Trump administration increased duties on Chinese goods to a combined 145% (a 125% reciprocal tariff plus a 20% fentanyl-related tariff imposed earlier in the year).23 China's Finance Ministry explicitly criticized the U.S. measures as contravening international trade regulations and representing "outright unilateral intimidation and coercion."1

Beijing's stance has hardened significantly, with Chinese officials stating that "at the current tariff levels, there is effectively no market for U.S. imports in China" and warning that if the U.S. government continues to escalate tariffs, "Beijing will choose to disregard them."2 Economic analysts have suggested this marks the conclusion of the tariff rate escalation phase, with both nations now assessing the economic impacts while global supply chains face potential significant disruptions.24

China has weaponized its dominance in rare earth minerals as a strategic countermeasure to Trump's tariffs, imposing export restrictions on seven critical elements (samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium) on April 4, 2025.12 This licensing system gives Beijing unprecedented control over these minerals essential for defense technologies, semiconductors, and clean energy applications, with China controlling approximately 90% of global refined rare earths production and processing.34 The restrictions have already disrupted global supply chains, with exporters reporting halted shipments as they await licenses from China's Ministry of Commerce.56

The impact extends beyond direct U.S.-China trade, affecting third countries like South Korea, whose manufacturers have reportedly been instructed to cease exports of power equipment containing Chinese-sourced rare earth metals to the U.S. military.7 While the U.S. has one operational rare earth mine at Mountain Pass, California, it cannot meet domestic demand, forcing companies like MP Materials to adjust operations by stopping ore shipments to China for processing.8 Experts view these restrictions as "an opening shot across the bow," with particular concern for U.S. defense contractors who require these materials for advanced weapons systems like F-35 fighter jets and nuclear submarines.94

The 145% tariff on Chinese imports represents the highest trade barrier imposed during the escalating U.S.-China trade war, but President Trump has indicated this rate won't be permanent. In April 2025, he suggested that "145% is very high, and it won't be" the final rate, hinting at potential reductions in the future.1 This maximum rate consists of a 125% reciprocal tariff combined with a 20% fentanyl-related tariff imposed earlier in the year.2

Despite the severe tariff level, the administration has already created exemptions for certain products, including computers and popular consumer electronics.3 The economic impact of these tariffs is projected to be substantial, with the Tax Foundation estimating Trump's tariffs will increase federal tax revenues by $166.6 billion in 2025 alone, making them the largest tax hike since 1993.4 However, these same tariffs are expected to reduce long-term GDP by 0.8% and potentially eliminate the equivalent of 671,000 full-time jobs, with the China-specific tariffs accounting for approximately 260,000 of those job losses.4

China has taken a firm stance in the trade dispute, demanding that the United States "completely eliminate all unilateral tariffs" as a precondition for any meaningful negotiations.12 Chinese Ministry of Commerce spokesperson He Yadong emphasized this position, stating that "the person who tied the bell must untie it," making it clear that Beijing expects Washington to make the first move.3

Despite President Trump's claims that "everything's active" regarding engagement with China, Beijing has categorically denied any ongoing trade discussions.45 Chinese officials dismissed reports of progress in bilateral communications as "groundless as trying to catch the wind."4 The Ministry of Commerce maintained that while China remains open to consultations, any negotiations must be conducted "on the basis of mutual respect and in an equal manner"—signaling that Beijing will not bend to pressure tactics and expects to be treated as an equal partner in resolving the trade conflict.14