US President Donald Trump has sharply escalated the ongoing trade standoff with China by raising tariffs on Chinese imports to 125%, a move announced just after China imposed an 84% tariff on American goods.

The exchange marks a dramatic deepening of the U.S.-China trade conflict, reigniting tensions that had somewhat cooled in recent years. China’s decision to raise tariffs came in response to earlier U.S. trade measures, prompting Trump to retaliate with what he called a necessary show of strength.

While the Trump administration announced a 90-day pause on tariff increases for most other nations, China is excluded from that grace period. The tariff hike to 125% targets a broad range of Chinese exports and signals a hardline stance heading into what could be a renewed trade war.

In Beijing, Chinese officials condemned the U.S. move, accusing Washington of “economic bullying” and warning that neither side will emerge victorious in a prolonged trade conflict.

Financial markets, surprisingly, responded with a strong rally—likely fueled by investor optimism that the pressure could lead to accelerated negotiations. Still, economists warn that the rising tariffs could increase consumer prices, worsen supply chain issues, and pose a risk to global economic growth if the conflict drags on.

Global leaders and trade analysts are now watching closely, with uncertainty looming over the future of U.S.-China economic relations.