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.”

Lee Jae-myung, leader of the opposition Democratic Party (DP) in South Korea, stated on Monday that he agrees the Constitution should be revised. However, he added that the immediate focus should be on resolving the social unrest stemming from former President Yoon Suk Yeol’s unsuccessful martial law proposal.

Lee’s statement came a day after National Assembly Speaker Woo Won-sik suggested holding a national referendum on constitutional revision before the presidential election, which must occur within 60 days following Yoon’s removal from office by the Constitutional Court this past Friday.

Lee effectively rejected Woo’s proposal, stating, “Constitutional revision is necessary, but ending the insurrection must come first.”

In addition to the impeachment, Yoon faces separate criminal charges related to insurrection for the brief martial law he declared on December 3.

Lee conditionally agreed to the amendment, pointing out the legal challenges of holding a referendum in conjunction with the election, given that early voting is not permitted for referendums under current law.

“If the National Referendum Act is revised and a constitutional amendment becomes practically feasible, we can do it immediately,” he said.

Lee conditionally supported a constitutional amendment that reflects the spirit of the 1980 pro-democracy uprising in Gwangju and tightens the requirements for declaring martial law.

Lee, who narrowly lost to Yoon in the 2022 presidential election, is seen as a leading candidate in the upcoming race. The government is expected to approve June 3 as the election day at Tuesday’s cabinet meeting.

Beijing has announced it will impose an additional 34% tariff on imports from the US, retaliating against taxes announced this week by Donald Trump in line with his aggressive trade agenda. This rate is the same as that announced by the US President against China.

The Ministry of Commerce announced on Friday that the tariff will apply to all imported goods of US origin starting from April 10.

Following the US President’s announcement of 34% “reciprocal” tariffs in addition to existing customs duties, taxes applied to Chinese exports will exceed 60%.

Beijing has condemned the US’s new taxes as “a typical act of unilateral bullying” that “does not comply with international trade rules and seriously damages China’s legitimate rights and interests.”

Chinese Foreign Ministry Spokesperson Guo Jiakun criticized the US’s “reciprocal tariffs” on Thursday, stating that the move seriously violates World Trade Organization rules and undermines the rules-based multilateral trading system.

The spokesperson stated, “China strongly opposes the US’s move and will resolutely take countermeasures to protect its legitimate interests.”

This swift response indicates that Beijing will also play hardball against the US.

Previously, US President Trump had stated that he was willing to make a deal in exchange for Beijing approving the sale of social media company TikTok.

As part of the retaliatory measures, Beijing also imposed export controls on 16 American companies and suspended the eligibility of six US-linked companies to export to China.

Eleven more US companies, including US drone manufacturer Skydio, were added to the unreliable entities list. In addition, China will place further restrictions on the export of certain rare earth minerals.

News of the tariffs on Thursday wiped 2.5 trillion USD from US markets, which experienced their steepest declines since 2020.

According to China’s cabinet State Council, the Chinese tariff will take effect from April 10.

Trump’s tariffs trigger $2.5 trillion wipeout on Wall Street