The ongoing trade war between the United States and China intensified Thursday as U.S. President Donald Trump increased tariffs on Chinese imports to 125 percent, just hours after China slapped 84 percent retaliatory tariffs on American imports.

In a clear sign that it does not intend to back down against the U.S., the Chinese government began hiking the duty on American goods at 12:01 p.m. local time.

Soon after, Trump announced a 90-day pause on his global tariffs, leaving them at the 10 percent baseline, except for China, which got hit with an even higher tariff, continuing the tit-for-tat hikes between the world’s two largest economies.

When President Trump announced last week that he would impose an additional 34 percent tariff on China last week, China countered by imposing 34 percent reciprocal tariffs against the U.S., which was met with an additional 50 percent retaliatory hike by Trump that the Chinese government matched.
 
The World Trade Organization predicts that trade in goods between the two countries will decrease by up to 80 percent and that the escalating conflict could lead the global economy to split into two factions.

Along with the tariff hikes, the Chinese government has sanctioned dozens of American companies, including defense firms, showing it does not intend to back down.

There are signs that Western companies, particularly those in the U.S. defense industry, are carefully preparing strategies to deal with widespread damage to high-tech industries as China accounts for 90 percent of global rare earth production.
 
The People’s Daily, the official newspaper of the Communist Party of China, said in an editorial on Monday that the country will continue to take strong countermeasures against what it called “U.S. economic harassment.”

The trade war is also affecting people-to-people exchanges between the two countries.