Trump shocks global markets with 145% China tariffs, fentanyl crackdown sparks fierce backlash

The United States has intensified its trade confrontation with China by announcing an unprecedented escalation in tariffs, lifting the overall rate on targeted Chinese imports to 145%. The White House confirmed the decision on April 10, 2025, attributing the increase to ongoing failures in trade negotiations and growing national security concerns, particularly regarding the inflow of fentanyl-related substances from China. The action follows a new executive order signed by President Donald Trump, which had earlier raised tariffs from 84% to 125% before the administration imposed an additional 20% specifically on fentanyl-linked imports.

This latest move signals a hardening of Washington’s economic posture against Beijing, reinforcing the Trump administration’s broader strategy of reasserting trade leverage over strategic sectors, curbing reliance on Chinese supply chains, and addressing illicit substance trafficking. It also reflects Trump’s belief that trade policy should serve national interests beyond economics, such as border control and public health, themes that have resonated strongly throughout his presidency.

What triggered this dramatic increase in China tariffs?

The tariff escalation is rooted in a series of breakdowns in trade diplomacy and the continuation of retaliatory tariffs by Beijing. Washington has repeatedly accused China of failing to engage constructively in negotiations, particularly on issues like technology transfer, intellectual property rights, and industrial subsidies. According to officials familiar with the matter, President Trump was reportedly frustrated by China’s unwillingness to make significant concessions despite multiple rounds of talks.

In a separate but closely linked development, the administration has also zeroed in on the fentanyl crisis, blaming Chinese exporters for supplying precursor chemicals used to manufacture synthetic opioids smuggled into the US. The White House stated that the new 20% tariff tranche specifically targets these fentanyl-related imports, and is aimed at deterring future flows of dangerous substances into American communities. This portion of the tariff policy aligns with previous efforts by the Trump administration to treat drug enforcement as a component of trade enforcement.

How has China responded to the tariff escalation?

Beijing has condemned the latest U.S. tariff hikes as unilateral and provocative. During a regular press briefing, a spokesperson for China’s Ministry of Commerce said that while the door to negotiations remains open, dialogue must occur on the basis of “mutual respect and equality.” The official insisted that threats and coercion are not appropriate channels for resolving complex trade disputes. Foreign ministry spokesperson Lin Jian went further, arguing that the United States’ approach lacks popular support and will ultimately fail.

This firm rhetoric reflects China’s longstanding position that economic pressure will not force its hand. China has consistently retaliated against U.S. tariff hikes with duties of its own, often targeting politically sensitive American exports such as agricultural products, energy, and manufacturing goods. The Ministry of Commerce suggested that further countermeasures could follow if the United States does not scale back its latest round of economic pressure.

What role is fentanyl playing in this trade war escalation?

The U.S. decision to include fentanyl-related imports in the latest tariff wave highlights the growing overlap between trade policy and domestic law enforcement concerns. Fentanyl, a potent synthetic opioid responsible for tens of thousands of deaths annually in the United States, has become a flashpoint in bilateral relations. U.S. law enforcement and intelligence agencies have accused Chinese companies of supplying precursor chemicals used in illicit drug production, often via transshipment through third countries.

While China has previously banned certain fentanyl analogues and cooperated on some enforcement efforts, U.S. officials claim these steps have been insufficient. By placing additional tariffs on imports linked to fentanyl production, the Trump administration aims to create a financial disincentive for manufacturers and intermediaries in China. This tactic, though controversial, reflects a broader effort to leverage trade penalties as a tool to influence foreign behavior on non-trade issues.

How have US political leaders and markets reacted?

Vice President J.D. Vance defended the tariffs, particularly in the face of criticism from some corners of the Washington establishment. In a post on social media platform X, Vance criticized what he called the hypocrisy of insiders who support strategic rivalry with China but oppose reducing American dependence on Chinese manufacturing. He argued that President Trump’s policy represents a push for peace through economic self-reliance, not aggression.

Treasury Secretary Scott Bessent also weighed in, calling China’s continued imposition of retaliatory tariffs “unfortunate.” Speaking to reporters, Bessent suggested that China must shift its economic model toward higher domestic consumption rather than relying on export-driven growth. He characterized the tariff war as an opportunity for the U.S. to restructure its trade relationships in a way that better protects domestic industry and workers.

Markets, however, have not taken kindly to the sharp turn in trade policy. The SPDR S&P 500 ETF Trust (SPY) dropped more than 5% in a single day, reflecting investor fears of a prolonged standoff between the world’s two largest economies. The iShares China Large-Cap ETF (FXI) also saw declines, though more modest, while individual companies heavily exposed to China, such as Alibaba Group Holding Ltd (BABA), also posted losses.

What is the broader context behind US-China tariff battles?

The origins of the US-China tariff war trace back to Donald Trump’s first term in office. In 2018, his administration imposed initial tariffs on Chinese goods, citing unfair trade practices and intellectual property theft. China retaliated in kind, and the two countries entered a protracted trade war that eventually led to the Phase One deal in early 2020. That agreement included Chinese commitments to purchase more American goods and undertake some structural reforms, but many of the deeper issues were left unresolved.

Since then, tensions have flared over a wider range of issues, from Taiwan and semiconductor exports to espionage and cyber intrusions. The tariff regime introduced under Trump has remained largely intact under successive administrations, with only limited modifications. The continuation and expansion of tariffs under Trump’s second term demonstrate the bipartisan consensus on countering China’s rise, even if methods differ.

The reactivation and escalation of tariffs to 145% suggest that the current administration sees trade as a strategic lever, not just an economic policy tool. By linking tariffs to security, supply chain resilience, and public health, Trump has reframed the purpose of economic sanctions in U.S. foreign policy.

How might this impact future trade negotiations?

The latest U.S. move complicates the path to a negotiated settlement. While both sides claim to be open to talks, their respective red lines appear increasingly difficult to reconcile. The U.S. insists on substantial structural reforms within China, greater transparency in subsidies, and stricter enforcement of drug control. China, on the other hand, seeks the removal of what it views as punitive and unfair economic restrictions.

Trade experts warn that the breakdown in negotiations could result in a decoupling of the two economies, particularly in strategic sectors like semiconductors, biotechnology, rare earths, and clean energy. U.S. policymakers have already begun encouraging domestic manufacturing of high-tech goods through subsidies and reshoring initiatives, while China is pursuing greater self-sufficiency under its “dual circulation” strategy.

Some analysts believe that escalating tariffs may ultimately force both sides back to the negotiating table, though not before further economic disruption. Others argue that the current climate of mistrust may prevent any meaningful agreement for the foreseeable future.

Can tariffs alone reshape the US-China economic relationship?

While tariffs can temporarily reduce trade deficits and incentivize domestic production, they are not a silver bullet for structural imbalances. Economists caution that tariffs, especially at extreme levels, often lead to higher costs for consumers, supply chain inefficiencies, and retaliation that harms exporters. They also risk undermining the multilateral trading system under the World Trade Organization.

Nonetheless, the Trump administration appears willing to absorb these costs in pursuit of broader strategic goals. The use of tariffs as a geopolitical instrument reflects a broader shift in global trade policy, where nations increasingly tie economic relations to issues like national security, data sovereignty, and environmental standards.

As the US-China trade war enters this more confrontational phase, the global economy is likely to feel the ripple effects. With markets reacting sharply and diplomatic channels narrowing, the question remains whether this aggressive tariff policy will yield the intended outcomes or entrench a prolonged economic divide between two global superpowers.