Trump 125% Tariff in Action: China’s Potential Response to Trade War?

In a dramatic turn of events, US President Donald Trump declared a sudden hike in tariffs on China, increasing them from 104% to 125%, while providing a 90-day reprieve to all other nations. The move has created worldwide interest, with fears of an even deeper trade war, and potentially destabilizing the global financial and crypto markets.

U.S.-China Trade War : Why 125% Tariff?

On Wednesday, Trump made an unexpected announcement—tariffs will rise immediately to 125% , up from the earlier 104%. He said this is due to what he called China’s “lack of respect” for the global markets. The pause on tariffs for over 75 other countries came after pressure from Republican leaders and US business executives worried about a market collapse. Trump said the decision to pause came from concern over the US bond market’s condition. Donald Trump shared the details over Truth Social .

Source: Truth Social

According to Trump 125% tariff news, many countries negotiated instead of retaliating, which led to a softer approach. However, China was excluded from this relaxation.

How Can China React to Trump 125% Tariff?

As tensions rise, there is growing speculation on how the country might strike back . Here are some of the possible actions that could follow:

• Tariff Rise on US Products : The nation might respond by increasing tariffs on American goods or blocking specific imports. They have already added 12 US entities to their export control list.
  

• Selling US Bonds : China currently holds around $760 billion in US government bonds. If it starts selling them, it could push up interest rates and trigger an economic shock in the US . This is considered one of Beijing’s most powerful economic tools.
  

• Bio-Nuclear or Digital Attack : There have been old claims linking the country to the 2019 COVID pandemic. Some believe such actions—if repeated—could be used as an economic weapon. While there’s no proof, fears of cyber or biological threats have resurfaced.
  

• World War 3 Risk : If talks fail and both sides keep pushing harder, some experts warn that the rising tensions could lead to a wider global conflict. While this sounds extreme, tensions between superpowers have historically led to wars.
  

• Bitcoin Selling : As per Bitcoin Treasuries by BitBO report , China holds over 194,000 Bitcoin while the US holds around 207,189 BTC .

Source: BitBO

If China decides to sell a large amount of BTC, it can crash Bitcoin prices and cause panic in the crypto community. This would deeply affect companies like MicroStrategy, which has heavy exposure to Bitcoin . A crash in BTC could drag down the entire crypto market.

How Will This Impact the Crypto Market?

Any retaliation by the nation will impact the world. With the global crypto market cap at $2.45 trillion (a 2.17% drop) and 24-hour volume falling by 16.02% to $129.94 billion, things already look shaky.

If the country dumps Bitcoin or creates economic pressure on the US , token prices could crash. MicroStrategy may face liquidation, affecting both the stock and crypto markets. This domino effect could cause losses across projects , users , and investors globally.

Even finance author Robert Kiyosaki has warned about an upcoming crypto market crash of 2025—possibly triggered by this growing trade tension.

Conclusion

Whether it’s raising tariffs, selling US bonds, or impacting the markets, China has options to respond. Trump 125% tariff decision forced the world to watch how the country chooses to act. One thing is certain—this ongoing trade battle could leave lasting effects on the global economy, the crypto space, and beyond.