China Retaliates with New Tariffs as US Trade War Intensifies

Trump Describes US Economy as in ‘Transition’ Amid Escalating Trade War

New Chinese tariffs targeting US agricultural products take effect

March 10, 2025

The United States finds itself in the midst of heightened trade tensions as China enforces retaliatory tariffs on key American farm products. Despite growing concerns about economic instability, President Donald Trump has refrained from confirming whether the US is heading toward a recession, instead characterizing the situation as a “period of transition.”

When asked directly about the risk of a downturn, Trump told Fox News in an interview recorded last Thursday but aired on Sunday: “I hate to predict things like that. There is a period of transition because what we’re doing is very big. We’re bringing wealth back to America. That’s a big thing.”

His comments follow a volatile week for US financial markets, which reacted sharply to the administration’s abrupt policy shifts. Just days ago, the US imposed new 25% tariffs on imports from Mexico and Canada, only to reverse course and exempt many of those goods shortly thereafter. Additionally, the White House doubled blanket tariffs on Chinese imports from 10% to 20%, prompting swift retaliation from Beijing.

As of Monday, China’s countermeasures have come into force, imposing fresh tariffs of 10% to 15% on select US agricultural products, including chicken, beef, pork, wheat, and soybeans.

White House Downplays Recession Fears

Despite mounting uncertainty, Commerce Secretary Howard Lutnick dismissed concerns that the US economy could contract. Speaking to NBC, Lutnick stated: “Foreign goods may get a little more expensive. But American goods are going to get cheaper.” When asked whether a recession was on the horizon, he was resolute: “Absolutely not… There’s going to be no recession in America.”

However, analysts warn that the trade dispute is likely to fuel inflation. Rachel Winter, investment manager at Killik & Co, told the BBC’s Today programme: “Tariffs are theoretically inflationary, and the level of tariffs that Trump is imposing will, no doubt, cause inflation somewhere down the line.”

China’s Strategy and Economic Outlook

With tensions escalating, Han Shen Lin, China country director at The Asia Group, noted that Beijing is shifting its economic strategy. Speaking to the BBC, he explained: “You’re seeing a lot of tit-for-tat between both sides, demonstrating that neither will back off easily.”

However, he added that China is less reliant on exports for GDP growth than in previous years and is increasing its focus on the domestic economy to mitigate trade-related disruptions.

Markets React to Escalating Trade War

Wall Street has reacted negatively to the uncertainty surrounding US trade policy, with investors fearing that tariffs could drive up prices and slow economic growth.

While Frank Lavin, a former Commerce Department official, believes the situation is unlikely to spiral out of control, he acknowledged that tariffs will remain a burden on the US economy, even if they eventually fade.

Meanwhile, Trump has continued to pressure China, Mexico, and Canada, accusing them of failing to curb illegal drug flows and migration into the United States—allegations that all three nations have firmly rejected.

As the standoff deepens, economists and investors alike remain on high alert, closely monitoring the impact of these aggressive trade policies on global markets and the broader US economy.