China has raised tariffs on U.S. imports to 125%, retaliating forcefully against President Trump’s latest tariff hike and escalating a trade war that is now shaking global markets.

Beijing’s announcement follows Trump’s decision to raise tariffs on Chinese goods to 145% earlier this week. In a statement, China’s Ministry of Finance condemned the U.S. action as “economic coercion” and a violation of international norms. The new tariffs, effective April 12, cover a wide range of U.S. exports including machinery, food products, automobiles, and semiconductor components.

In his first public remarks on the confrontation, President Xi Jinping declared that China is “not afraid” of economic confrontation and urged the European Union to resist U.S. “bullying.” He warned that the United States is risking “self-isolation” and long-term economic damage.

China also filed a formal complaint with the World Trade Organization, accusing Washington of deliberate destabilization. Non-tariff measures have followed: several U.S. films were pulled from Chinese theaters, and new travel and education warnings have been issued for Chinese citizens considering the United States.

Markets responded swiftly. The S&P 500 fell 2.1% in early trading, while gold surged to a new record high. The U.S. dollar dropped to a multi-year low as investors braced for deeper conflict. European and Asian markets posted mixed results, with key indices in Tokyo and Frankfurt turning negative after early gains.

China’s move marks a decisive rejection of any backchannel negotiation attempts, with analysts warning that both sides are now locked in a full-scale economic confrontation with no clear exit.

“Xi Jinping is sending a message: China will not blink first,” said economist Jia Cheng of the Shanghai Policy Institute. “The longer this drags on, the greater the global fallout.”

The Crustian Daily will continue tracking economic, diplomatic, and political developments as the trade war escalates.