US China Trade War Escalates: Tariffs Soar to 124.1% Amid Trump Administration's Aggressive Economic Measures
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US China Trade War Escalates: Tariffs Soar to 124.1% Amid Trump Administration's Aggressive Economic Measures
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The US-China trade war has reached unprecedented levels as we move through May 2025, with US tariffs on Chinese exports now standing at a staggering 124.1 percent. These rates are more than 40 times higher than before the tariff war began in 2018 and six times higher than they were when Trump took office in January this year.
The escalation began early this year with 10 percentage point increases implemented in February and March. The situation intensified dramatically in April when President Trump announced his "Liberation Day" initiative, aimed at addressing what he called "the national emergency posed by the large and persistent trade deficit."
On April 2nd, the White House imposed a universal 10 percent tariff on all imports, which took effect on April 5th. For China specifically, an additional 34 percent tariff was announced, which was later increased to 84 percent on April 9th following China's retaliatory measures.
China has not taken these actions lightly. In early April, Beijing announced a 34 percent blanket retaliatory tariff on all US goods, alongside export restrictions on rare earth elements and sanctions against 30 US defense-related organizations. According to the Peterson Institute for International Economics, China has retaliated in three tranches, lifting its average tariff on US exports to a remarkable 147.6 percent.
The trade war has expanded beyond just tariffs. On April 8th, Trump signed an executive order officially ending the de minimis exemption for low-value shipments from China, Hong Kong, and Macau, effective May 2nd. This removed the $800 USD duty-free threshold that many cross-border e-commerce businesses relied on.
For businesses importing from China, the "postal carve-out" for Chinese-origin orders has been updated to 90% of the value or $75 per package as of May 2nd, with another increase to $150 or 90% scheduled for June 1st.
One small relief for publishers and booksellers: books remain exempt from these new tariffs as they qualify as "informational materials" under the International Economic Emergency Powers Act.
Economists warn these exceptionally high tariffs are likely to significantly impact macroeconomic aggregates, trade patterns, and the structure of global value chains in the coming months.
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