China has increased its tariffs against the United States (US) imports to 125%, it’s retaliating after US President Donald Trump’s decision to increase duties on Chinese goods to 145%.

This has raised the stakes in a trade war that threatens to destabilize the global supply chains. Chinese President Xi Jinping says his country is not afraid and warned that there are winners in a trade war.

Xi Jinping says China and other countries should jointly oppose unilateral acts of bullying. He says the world’s second-largest economy will continue to uphold the global rules-based order.

“We have always believed that the stable, healthy and sustainable development of China-US relations is in the fundamental interests of the two people. The essence of China-US economic and trade relations is mutually beneficial and win-win, and economic and trade frictions should be properly resolved through equal dialogue and consultation. China will handle the broad future of China-US relations per the principles of mutual respect, peaceful co-existence and win-win cooperation,” Xi Jinping elaborates.

Executive director of the International Trade Centre, Pamela Coke-Hamilton explains the impact the tariffs will have on the rest of the world.

“We are looking at an 80% reduction. If this tariff escalation between China and the US continues, it will result in an 80% reduction between China and US trade. And the ripple effect of that across the board can be catastrophic, because we are no longer in a world where you have one-way trade. We are talking about 40% of goods that move are intermediate goods, which means that everything along the supply chain is going to be impacted by the change in the trade relationship.”

However, Chinese Ministry of Commerce Spokesperson He Yongqian says Beijing is open to talks with the US and that dialogue must be conducted on an equal basis with mutual respect.

“China’s position is clear and consistent; the door to talks is open. China will stand by its position until the end. Pressuring, threatening and blackmailing are not the correct ways to deal with China. We hope that the US will work with China, based on the principles of mutual respect, peaceful coexistence and a win-win cooperation. We will properly resolve differences through dialogue and consultation.”

Meanwhile, Chinese top diplomat Wang Yi says the US cannot act recklessly and the wheel of history cannot go backwards, referring to the US tariffs on China.