China ‘not afraid,’ Xi says, as Beijing raises tariffs on U.S. goods to 125%

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Chinese leader Xi Jinping made his first public comments Friday in response to an escalating trade war with the United States, warning there can be no winner in such a conflict, even as Beijing ramped up tariffs on U.S. goods to 125 per cent.

Speaking to Spanish Prime Minister Pedro Sanchez in the Chinese capital, Mr. Xi said China is “not afraid” of challenges, and “no matter how the external environment changes, China will strengthen its confidence, maintain determination and focus on doing its own thing.”

Without naming the U.S., Mr. Xi called on the European Union to join China in resisting “unilateral bullying,” and noted the two economies account for “one-third of the world’s total economic volume.”

“There will be no winners in a tariff war, and going against the world will isolate oneself,” Mr. Xi said.

Facing rapidly escalating tariffs from the U.S., China has been trying to build ties with other economies to try to counterbalance what is sure to be a major hit to the country’s exports. With U.S. President Donald Trump slapping new levies on almost all of Washington’s major trading partners, this approach had been making some ground, with the EU and others opening new talks with Beijing as they prepared their own countermeasures.

But China was left suddenly isolated after Mr. Trump’s stunning reversal Wednesday, in the face of collapsing stock markets worldwide, when he paused tariffs on every country but China, which now faces a levy of 145 per cent.

Some of Mr. Trump’s advisers have claimed this was the plan all along, and have spoken of further isolating China in trade talks with other nations, perhaps by forcing them to agree to similar tariffs on Chinese goods.

Beijing has repeatedly said it too is open to discussions with Washington, but Mr. Trump has made clear Mr. Xi must be the one to make the first move, something the Chinese leader has been unwilling to do.

On Friday, China’s Finance Ministry said it was raising tariffs on U.S. goods from the previously announced 84 per cent to 125 per cent, though it noted “if the U.S. continues to play the tariff numbers game, China will ignore it.”

“At the current tariff level, there is no market acceptance for U.S. goods exported to China,” the ministry said in a statement, adding that Beijing may resist in other ways. “However, if the U.S. insists on continuing to substantially infringe on China’s interests, China will resolutely counterattack and fight to the end.”

Albert Chan, a professor emeritus at Huron University College in London, Ont., and author of a biography of Mr. Xi, said an escalating trade war between the U.S. and China will hurt both sides.

“Beijing does not want this trade war since its economic well-being is so dependent on international trade and investment,” he said. “Yet, currently, there is no possibility that Beijing would capitulate to the U.S.”

This will lead to economic hardship in the U.S., given Beijing’s superiority in manufacturing, important role in many supply chains, dominance of rare earths and other factors, Prof. Chan added. “It is a total lose-lose situation.”