China hits back at Trump tariff hike, US stands its ground

China's retaliation intensified the economic turmoil unleashed by Trump's tariffs, which has seen markets tumbling and foreign leaders puzzling how to respond to the biggest disruption to the world trade order in decades.

U.S. markets opened lower on Friday. The Dow Jones Industrial Average fell 100.2 points at the open, while the S&P 500 fell 12.5 points at the bell.

"Recession risk is much, much higher now than it was a couple weeks ago," said Adam Hetts, global head of multi-asset at Janus Henderson.

The U.S. administration was sticking to its guns on Friday, touting its discussions with a number of countries on new trade deals which it says will justify its dramatic upheaval in policy.

"We are doing really well on our TARIFF POLICY. Very exciting for America, and the World!!! It is moving along quickly," Trump posted on social media on Friday.

However, the tit-for-tat tariff increases by the U.S. and China stand to make goods trade between the world's two largest economies impossible, analysts say. That commerce was worth more than $650 billion in 2024.

Global stocks fell, the dollar slid and a sell-off in U.S. government bonds picked up pace on Friday, reigniting fears of fragility in the world's biggest bond market. Gold, a safe haven for investors in times of crisis, scaled a record high.

TRADE WAR WITH CHINA

While announcing a 90-day tariff pause on dozens of countries earlier this week, Trump ratcheted up tariffs on Chinese imports, raising them effectively to 145%.

China hit back with its own new tariffs on Friday, with the finance ministry saying Trump's new tariffs were "completely unilateral bullying and coercion."

Beijing indicated that this would be the last time it matched the U.S., should Trump take his duties any higher. But it left the door open for Beijing to turn to other types of retaliation.

"If the U.S. truly wants to have talks, it should stop its capricious and destructive behavior," Liu Pengyu, spokesperson for the Chinese Embassy in the United States, wrote on social media on Friday. "For the welfare of the Chinese and the people of the world, for the fairness and justice of the global order, China will never bow to maximum pressure of the U.S."

UBS analysts in a note called China's declaration that it would not retaliate any further with tariff increases "an acknowledgement that trade between the two countries has essentially been completely severed."

U.S. Trade Representative Jamieson Greer said he was not surprised by China's latest countermeasures, but they were "certainly unfortunate."