China on Friday said it was raising its tariffs on American goods to 125%, retaliating for the third time in the escalating trade war between the two superpowers.

The brinkmanship between President Donald Trump and Xi Jinping, China’s top leader, threatens to rip apart trade ties between the world’s two largest economies after years of simmering tensions.

China accompanied its announcement of the higher levies, which take effect Saturday, with a mocking statement calling Trump’s tariff policies “a joke.”

The announcement by the State Council, China’s Cabinet, followed a clarification Thursday by the Trump administration that Chinese goods imported to the United States now face a minimum tariff rate of 145%.

Over the past two weeks, China and the United States have been engaged in a fast-moving tit-for-tat that has resulted in ever-higher barriers to trade, churning markets and threatening economies around the world.Stocks ended the week on a positive note, with the S&P 500 rising about 2%, although it remained 5% below its value April 2, the day Trump announced a raft of global tariffs. Yields on U.S. government bonds rose again Friday, in a sign that the world’s faith in the U.S. economy had been shaken by Trump’s trade war with China.

Laurence D. Fink, CEO of giant asset manager BlackRock, said Friday morning on CNBC that the United States had become “the global destabilizer.” Jamie Dimon, CEO of JPMorgan Chase, said his bank was concerned about the price of Treasury bonds — they move inversely to yields — and looking at the bond market “every minute.”

Consumer sentiment fell again in April as expectations about inflation surged, according to the latest survey by the University of Michigan. Survey respondents expected the annual inflation rate, now below 3%, to increase to 6.7% in the coming year, the highest reading since 1981 and a sharp acceleration from March’s 5% level.

Meanwhile, Trump’s advisers fanned out on TV networks to issue reassuring messages.

Speaking on Fox News, Jamieson Greer downplayed the risks that the tit-for-tat could result in substantial price increases for consumers, given how much the United States imports from China. “While there may be an adjustment,” he said, “I think we’re going to be on a good path, and I don’t think we’re going to see that level of increase in household expenses.”

Trump claimed that his administration is “doing really well on our tariff policy,” he wrote on Truth Social, his social media site. “Very exciting for America, and the World!!! It is moving along quickly.”

Peter Navarro, a senior White House trade adviser, said Trump was angling for “90 deals in 90 days” with countries willing to negotiate lower tariffs with the United States.

“Americans should trust in Trump, the markets should trust in Trump, and not get these weak knees,” Navarro said on Fox Business.

Over years of mutual commerce, American and Chinese companies have grown dependent on each other — for supply chains and factories on one side, and for access to markets on the other. But now the dizzying displays of retaliation have forced business partners to abruptly slash orders and hope for some kind of detente.

Hobby Lobby, a crafting retailer, told vendors that it was delaying shipments from China as a result of the escalating trade war, according to correspondence dated Thursday and viewed by the New York Times. The retailer told vendors that the back-and-forth tariffs resulted in “a rapidly shifting and unpredictable landscape” and that it hoped diplomacy between the U.S. and China “will yield a more stable and balanced outcome.” As a result, the email said, the company was delaying shipments, but not canceling orders, and would review its plans weekly.

This week, Trump reversed course on the so-called reciprocal tariffs that he had placed on dozens of countries. But instead of pausing the levies on China, he chose to raise the tariffs to 125% as a penalty for what he called China’s “lack of respect.” The move followed China’s decision to tax American goods at 84%.

Adding to the confusion, the White House on Thursday clarified that the taxes had actually been set at a minimum of 145%. Additional sector-specific tariffs have been imposed on imports of cars, steel and aluminum, as well as other goods that have been subjected to levies since Trump’s first presidency.

The Trump administration’s approach to China was a “numbers game which has no practical significance on economics,” a spokesperson for China’s Ministry of Commerce said at a news conference Friday. “It’s become a joke,” said the spokesperson.

For years, the United States and China prospered together, based on a recognition that they both benefited from China’s joining the global trading system through institutions such as the World Trade Organization. American companies, in return, were given access to China’s huge base of consumers while American shoppers could buy everything — from socks to computers — at much cheaper prices.

More recently, though, the United States and China had engaged in low-level combat. China ramped up state subsidies of key industries, a practice that the United States has said gives Chinese manufacturers an unfair advantage. Xi also pushed China to become less reliant on American technology. In Trump’s first presidency, he waged a trade war that ultimately resulted in an armistice in 2020.

This time around, in Trump’s second term, the gloves are off. Even before he entered the White House, Trump foreshadowed a determination to “make China pay.” Trump has focused his anger on the massive trade imbalance with China, which sells significantly more to America than it buys.

China, for its part, vowed this week to “fight to the end.”

Karoline Leavitt, the White House press secretary, said Friday that Trump was “optimistic” that a trade deal could be reached with China and that he was ready to be “gracious” about it. She would not say if there were any plans for negotiations between the two countries. She said U.S. allies and foes alike needed the U.S. to survive, “and the president is using that leverage to our advantage.”