China¡¯s 125% tariff response to Donald Trump: What the pause means for India, EU, and global trade partnerships in 2025

U.S. President Donald Trump¡¯s tariff strategy has taken a sharp turn. While announcing a 90-day pause on reciprocal tariffs for more than 75 countries, Trump made it clear that China will not receive the same benefit. Instead, China now faces a cumulative tariff rate of 145% from the U.S. As the tariff war escalates for some and slows for others, different countries and sectors are seeing very different outcomes.

China faces steepest tariffs and hits back

Trump¡¯s recent executive order has set China¡¯s total tariff rate at 145%, with 125% from the reciprocal tariff and an additional 20% linked to fentanyl-related imports from earlier this year. In response, China raised its tariffs on U.S. goods from 84% to 125%. China¡¯s finance ministry said that at the current rate, U.S. goods are no longer viable in the Chinese market. The ministry also added that if the U.S. continues to increase tariffs, China will ¡°ignore¡± and not respond with further hikes.

Despite these strong words, China has held back from expanding export controls or adding more U.S. firms to its "unreliable entity list," which would impose additional restrictions on their operations in China. A spokesperson from China¡¯s commerce ministry reiterated that Beijing remains open to negotiating with the U.S., but only on equal terms.

President Xi Jinping, while meeting Spain¡¯s Prime Minister Pedro S¨¢nchez, repeated that ¡°there is no winner in a tariff war,¡± adding that isolating oneself from the world only leads to greater difficulties. Xi also used the meeting to suggest strengthening partnerships with the EU to resist trade pressure tactics.

Donald Trump pauses tariffs for others

While China faces the brunt of Trump¡¯s tariff strategy, over 75 other countries have seen their reciprocal tariffs paused for 90 days. In a social media post, Trump said this was in response to those countries not retaliating and showing willingness to negotiate. During this 90-day window, the reciprocal tariff is reduced to 10% across the board, effective from April 5. However, China remains excluded from this pause due to its retaliatory stance.

This decision effectively isolates China from the benefits of the tariff freeze. As U.S. Treasury Secretary Scott Bessent stated, China remains a key challenge in global trade, calling it one of the most imbalanced economies. He described the ongoing escalation as detrimental to China rather than the U.S.

India¡¯s tariffs paused

India, which has been in long-term trade discussions with the U.S. since the start of the Trump administration, benefits from the pause. The 26% reciprocal tariff on Indian exports to the U.S. has been suspended for 90 days. However, India is still subject to the 10% baseline tariff that came into effect on April 5 and applies to all countries.

India¡¯s external affairs minister, S. Jaishankar, has reportedly held talks with U.S. Secretary of State Marco Rubio to push for a complete reprieve¡ªincluding the baseline tariff. While there has been no final decision, India is hoping for a full rollback, at least during the 90-day pause period.

EU¡¯s 20% tariff paused

The European Union, which had announced retaliatory tariffs of 20% on U.S. goods, finds itself in a different position. Since those tariffs had not yet taken effect, Trump¡¯s pause applies here as well. Like India, the EU will also face only the 10% baseline tariff during the pause.

At the same time, Xi Jinping has reached out to the EU to strengthen economic ties. His call to the European Union to join hands with China in resisting trade ¡°bullying¡± is being seen as a strategic move to align with like-minded partners amid rising tensions with the U.S.

Canada and Mexico see no major change

Canada and Mexico remain unaffected by the baseline 10% tariff due to their participation in the USMCA trade agreement. Their fentanyl-related tariffs remain unchanged, and while USMCA trade remains duty-free, non-USMCA trade is still subject to a 25% tariff¡ªexcept for energy and potash, which continue to be taxed at 10%.

Additionally, the 10% baseline tariff that took effect on April 5 has not been applied to Canada and Mexico and will not be applied during the 90-day pause. These exemptions indicate that USMCA partners remain relatively insulated from Trump¡¯s broader tariff strategy.

No change in sectoral tariffs

Even with the pause in place for many countries, certain U.S. tariffs continue unchanged. Section 232 tariffs on steel, aluminium, and automobiles still apply at 25%. These remain unaffected by the 90-day freeze.

Furthermore, earlier sectoral carve-outs¡ªparticularly for pharmaceuticals, semiconductors, and critical minerals¡ªare still in effect. However, Trump has indicated that the pharma sector could soon face tariffs if necessary. Until then, these key sectors remain exempt from reciprocal tariff measures.

China¡¯s domestic shift and economic impact

Donald Trump (L) Xi Jinping (R) | Credit: X

Facing heavy tariffs, China is shifting focus inward. JD.com, one of the country¡¯s largest online retailers, announced a 200 billion yuan fund (approximately ?20.8 billion) to help Chinese exporters redirect their goods toward the domestic market.

This policy move aims to cushion the impact of falling exports to the U.S., which currently account for about 3% of China¡¯s total GDP. According to Goldman Sachs, the trade conflict and slower global growth are expected to bring China¡¯s GDP growth down to 4%. Analysts also warn of a broader impact on employment, estimating that between 10 and 20 million Chinese workers are involved in sectors that rely on U.S.-bound exports.

No winners, just more uncertainty

The current state of global trade¡ªshaped by pauses, exceptions, and sharp retaliations¡ªsheds a light on a growing divide. While over 75 countries benefit from Trump¡¯s tariff pause, China faces increased economic pressure. The absence of any meaningful negotiation, combined with rising domestic responses in China and cautious diplomacy elsewhere, suggests that global supply chains remain vulnerable. For now, the tariff war may be slowing, but its consequences continue to unfold.