China vows to fight Trump’s tariff threat ‘to the end’

China has vowed to “fight to the end” if the US continues to threaten tariff increases. Fears are growing that the world’s two largest economies are preparing for a sharp decoupling.

The Chinese Ministry of Commerce said on Tuesday that it would retaliate if US President Donald Trump carries out his threat to impose an additional 50% tariff on Chinese goods.

A ministry spokesperson said in a statement on Tuesday, “If the US persists in implementing these increased tariff measures, China will resolutely take countermeasures to protect its rights and interests.” He added, “If the US insists on doing what it wants, China will fight to the end.”

Trump’s tariff plans have shaken global markets in recent days.

The S&P 500 index has lost more than $5 trillion in value since Trump shocked US trade partners with universal tariffs and “reciprocal” taxes, triggering warnings of faster inflation and slower economic growth, or outright recession. The index closed down 0.2% overnight after sharp fluctuations, and Asian markets rebounded. US stock futures were poised for a recovery on Tuesday.

Beijing said it would impose a 34% tariff on US imports after US tariffs on Chinese goods took effect. On Monday, Trump threatened to impose an additional 50% tariff on Chinese goods if it did not remove retaliations, a move that would raise US tariffs on Chinese imports to over 120% by some estimates.

“The US threat to further increase tariffs is another mistake compounded by a mistake and once again exposes the coercive nature of the US side,” the ministry spokesperson said. “China will never accept this,” he added.

Beijing supported its threat of retaliation by fixing the exchange rate of its currency, the renminbi, at 7.20 Rmb per dollar—its lowest level since September 2023—a sign that it may use devaluation to offset Trump’s tariffs.

During the first Trump administration, Beijing had allowed its currency to fall to offset the impact of tariffs. On Tuesday morning, the freely traded offshore renminbi weakened, crossing the 7.35 Rmb per dollar threshold for the first time since February.

“I don’t think Beijing will back down,” said Lynn Song, ING’s chief economist for Greater China. “This may be a situation about who will blink first,” she continued.

Song added, “At this point, it looks more like a test of endurance—basically, who will feel the pain first and who will have to come to the table with a slightly weaker bargaining position.”

The US agreement to begin negotiations with Japan on tariffs caused shares there to rise after Treasury Secretary Scott Bessent said Tokyo would “take priority because they came forward very quickly.”

Chinese markets rose on Tuesday after experiencing major declines on Monday. Hong Kong’s Hang Seng index rose 3%, led by Chinese companies listed in the region, while the mainland’s CSI 300 index rose 0.3%.

China’s financial regulators and state fund managers pledged to support the country’s stock market on Tuesday. Numerous Chinese companies also announced share buybacks.

Chinese experts said that while the world’s second-largest economy would suffer from Trump’s trade turmoil, Beijing would maintain its stance rather than yield to Washington.

“There is no chance that Beijing will yield to Trump’s intimidation,” said Gao Jian, a Shanghai-based foreign policy expert from Tsinghua University’s Center for International Security and Strategy.

Shi Yinhong, a government advisor and professor at Renmin University, said that US-China trade would “largely vanish,” but that Beijing’s tough approach was unlikely to change.

“China stands out as the only country in the world that has taken a uniquely tough and uncompromising position in response to Trump’s tariff war,” Shi added, predicting that a new global trade paradigm would be “extremely disadvantageous for China.”