The United States-China trade confrontation enters a new phase of escalation as Beijing announced a 125% increase in tariffs on all U.S. products. The announcement came just hours after Xi Jinping said “there are no winners in a trade war” during his meeting with Spanish Prime Minister Pedro Sanchez, where he also called for cooperation with Europe.

China‘s Ministry of Commerce called it a “final response” to Donald Trump‘s policies, noting that “at the current level of tariffs, there is no longer any acceptance of US products in the Chinese market.” Although Beijing said it does not intend to continue the cycle of retaliation with tariffs, it left open the possibility of other countermeasures.

Chinese officials have already been sounding out other trading partners on how to deal with US tariffs after the country was exempted from Trump’s 90-day pause on the steepest global tariffs. Instead, the US president proceeded with successive increases in tariffs on Chinese imports, which now stand at 145%.

Battered financial markets got a brief reprieve on Wednesday when Trump decided to pause tariffs on dozens of countries. But his escalating trade dispute with China, the world’s second-largest economy, continued to fuel fears of a recession and further retaliation.

Chi Jinping’s geopolitical call to the EU

During his talks with Pedro Sanchez, Xi Jinping sent a clear message of support to the European Union, urging it to work with China against “unilateral intimidation”. “There are no winners in trade wars. Anyone who goes against the world is isolated,” the Chinese president reportedly said.

In the same vein, he added that China and the EU should “uphold international norms and justice” and strengthen economic cooperation between them.

The Spanish side, for its part, said it favored a balanced EU-China relationship based on negotiations and common interests.

Economic impact – Global turmoil intensifies

As the UK’s Guardian reported in an analysis, markets tumbled again on Friday, with Japan’s Nikkei index losing nearly 5% and the Hong Kong stock market posting its worst weekly performance since 2008. Oil prices were also down for a second week.

President Macron described as “fragile” the 90-day suspension of tariffs announced earlier by Donald Trump for dozens of countries – but which excluded China.

China has already restricted imports of Hollywood movies, placed 18 US companies on trade restriction lists and launched a campaign to find allies to form a common front against the US.

Open door, but no retreat

Trump, for his part, insists that “a deal with China is possible” and said Xi Jinping remains his “friend”. At the same time, however, he accused Beijing of “taking advantage of the US for too long” and described the tariff increase as a necessary “rebalancing.”

Chinese Foreign Ministry spokeswoman Lin Jien said China “will not stand idly by when its rights are violated,” adding that dialogue remains an option, “but only on the basis of mutual respect.”

Economic shock in US – 45% recession probability

The economic turmoil has sparked a new wave of concern about a recession in the US. Goldman Sachs now puts the probability at 45%, while the S&P 500 index has lost about 15% from its record high in February.

White House officials, including Treasury Secretary Scott Bessend, assure that they are in contact with more than 75 countries about new trade deals. The US has already begun talks with Vietnam and Taiwan, while Japan is preparing a mission to Washington.

However, uncertainty, costs and disruption to supply chains continue to cause skepticism among business leaders. While Trump’s moratorium has brought temporary relief, his insistence on economic protectionism is reshaping global trade in ways that are hard to predict.

The US-China trade war is evolving into a head-on conflict with global repercussions. If China shows no inclination to retreat and the US continues on this course, then a systemic realignment of global trade – with risks of recession, ruptures in international alliances and unforeseen geopolitical consequences – cannot be ruled out.