Explained: The US-China Tariff War Math As Trump And Xi Go 'All-In'

The two largest economies in the world - the United States and China - are at war, with tariffs being used by either side as its weapon. While the US has increased reciprocal tariffs on all Chinese goods from 10 per cent on April 1, to 125 per cent today; China has retaliated by upping tariffs on all American goods from 67 per cent on April 3 to 151 per cent today.

The rest of the world, still unsettled by the crash of the global stock markets - where trillions of dollars were wiped out within a matter of days, is sensing the gravity of the situation. Fears of a worldwide recession arising from this tit-for-tat battle seem to be heading towards becoming a reality. 

'NO-LIMITS' POKER DUEL

While the two major economies clash with each other, dealing blow after blow, both leaders are in the midst of a staring contest - with neither willing to blink. US President Donald Trump is determined to teach "tariff abuser" China a bitter lesson, and Chinese President Xi Jinping has said he is willing to "fight to the very end" over what his country has described as American "blackmail".

What started off as a reciprocal tariff move by Trump, seems to have turned into a no-limits poker duel. While the US President raised tariffs on China on April 2nd, calling it "Liberation Day", Beijing matched Washington's move, over and above its old tariffs, infuriating Trump.

The US President then sent an ultimatum to his Chinese counterpart and gave him 24 hours to "withdraw" his move. China's Xi decided to 'check', standing his ground, hoping to call Trump's 'bluff'. But Trump followed through by 'raising' tariffs further.

Xi Jinping, now 'committed' to the high-stakes battle, 'matched' Donald Trump yet again in terms of reciprocity of retaliatory tariffs - resulting in China exceeding US' 104 per cent to reach 151 per cent, leaving President Trump to make his next move.

US' 125% vs CHINA'S 151% - THE TARIFF MATH SO FAR

As both Trump and Xi well on their way to go 'all-in', dragging the rest of the world into an uncertain economic future, here is a look at how the tariffs stand so far:

1. Before April 2 - 'Liberation Day' - China used to levy tariffs on US goods at 67 per cent, while US used to impose a 10 per cent tariff on goods from China. This, President Trump said, "robbed" and "ripped-off" the US economy for decades. He said it is only fair for the US to match China. So, came "Liberation Day" - to free American exporters of punitive duties by other nations, and help "make America wealthy again". (Till now China's 67 per cent vs America's 10 per cent)
2. On April 2nd - Donald Trump announced "reciprocal tariffs" on all nations that tariff American goods. This included China, who he described as a "tariff abuser for decades". Trump explained that "As the term suggests, today's tariffs are just reciprocal - which means - we do to them, what they do to us." But he added that the US would be "kinder" by charging roughly half of what the rival nation charges. So, for China, which charged 67 per cent at that time, Trump announced a 34 per cent hike in reciprocal tariffs. (Till now China stood at 67 per cent vs America's 10+34, equaling 44 per cent).
3. Later, on April 2nd - Shortly after Trump's announcement, the White House said in a statement that the US will be charging all nations in the world a non-reciprocal 10 per cent tariff. The statement said that due to a "national emergency" which has stemmed from security concerns due to persistent trade deficits, the US will now be imposing a "baseline" 10 per cent tariff on all countries. (China's basket of tariffs now stood at 44+10 = 54 per cent. While China's tariff levy on the US still stood at 67 per cent).
4. On April 4 - Forty-eight hours after US's reciprocal tariff move, China retaliated. Beijing announced that Trump's moves would impact Chinese exports significantly, and so, to counter the move, Xi Jinping decided to match Trump's 34 per cent increase, infuriating the US President who had warned all nations not to retaliate, else they will suffer further. (US's tally of Chinese tariffs now stood at 67+34 = 101 per cent vs China's tally of US tariffs remained at 54 per cent).
5. April 7th and April 8th - The weekend went by, and by now the US-China trade war had resulted in global markets losing several-trillion dollars in investor wealth. But Trump and Xi remained unmoved. Donald Trump issued a 24-hour ultimatum to Xi Jinping to "withdraw" its retaliatory 34 per cent tariff, or face "an additional 50 per cent tariff" on all Chinese goods, starting April 9. President Xi vowed to "fight till the end" and stood his ground, so President Trump followed-through 24-hours after his threat. (US' tariffs on China now stood at 54+50 = 104 per cent, while China's tariffs on US stood at 101 per cent).
6. April 9, 2025 - Vowing not to give in to American "blackmail", Beijing decided to further retaliate US tariffs by again matching Trump's "additional 50 per cent" move. This raised China's retaliatory tariffs from 34 per cent to 84 per cent. Donald Trump made his next move, a punishing one, swiftly, raising US tariffs on Chinese goods from 104 per cent to 125 per cent, while pausing tariffs he had imposed on other nations for 90 days, during which those nations and the US can negotiate favourable terms for both. (So, as of now, US tariffs on China stand at 125 per cent, and Chinese tariffs on US stand at '101+50' or '67+84' - either way making it 151 per cent).

The trade war between the United States and China has surged in less than a week and shows no signs of dying down. Economists have warned of a possible recession in the making, as stock markets, oil prices, trade, supply chains, and logistics have taken a massive hit.