The ongoing trade tensions between the world’s two largest economies took a sharp turn on Friday, as China ramped up its tariffs on U.S. imports from 84% to a staggering 125%. The announcement came shortly after the Trump administration confirmed that total U.S. tariffs on Chinese goods have reached 145%.

According to China’s finance ministry, the move is in direct response to what it calls “reciprocal tariffs” imposed by President Donald Trump. In a strongly worded statement translated by CNBC, Chinese officials warned that the U.S. tariff strategy “no longer makes economic sense” and would eventually become “a joke in the history of the world economy.”

The ministry added that with duties now at such high levels, American goods are becoming unviable in the Chinese market. “If the U.S. government continues to increase tariffs on China, Beijing will ignore,” the statement warned.

Interestingly, China has held back on additional measures like expanding its ‘unreliable entity list’, which would subject more U.S. firms to restrictions. Instead, the Chinese commerce ministry says the door is still open for negotiations—if talks are held on equal terms.

However, optimism over a potential resolution is fading. Over the past week, Beijing has responded to U.S. actions with more tariffs and tighter controls on American businesses operating in China.

Speaking to Fox Business earlier this week, U.S. Treasury Secretary Scott Bessent criticised China for what he called “the most imbalanced economy in the history of the modern world,” adding that the current trade strategy “is a loser for them.”

Meanwhile, Goldman Sachs has cut its forecast for China’s GDP growth to 4%, citing the impact of these trade tensions and a broader global slowdown. Though exports to the U.S. only make up a small portion of China’s GDP, the fallout could still affect 10 to 20 million workers involved in the export sector, according to the investment bank.

Despite the rocky road ahead, Chinese President Xi Jinping struck a more diplomatic tone during talks with Spanish Prime Minister Pedro Sánchez on Friday. Xi stated, “There is no winner in a tariff war and going against the world will only isolate itself,” emphasizing China’s intent to strengthen global partnerships in trade and innovation.