BEIJING, China (AFP) — China said Friday it would raise its tariffs on United States (US) goods to 125 per cent in a further escalation of a trade war that threatens to bring exports to a halt between the world’s two biggest economies.

Beijing’s retaliation sparked fresh market volatility, with European stocks seesawing following the announcement while Tokyo and Seoul closed in the red.

In a sign of investors’ worries about the health of the US economy under President Trump’s erratic stewardship, the dollar fell to a three-year low against the euro and by 1.3 per cent against the yen.

In Beijing, China’s State Council Tariff Commission said new tariffs of 125 per cent on US goods would take effect Saturday, almost matching the staggering 145 per cent level imposed on Chinese goods coming into America.

A Commerce Ministry spokesperson said the United States bore “full responsibility for this”, deriding Trump’s tariffs as a “numbers game” that “will become a joke”.

The Chinese finance ministry said tariffs would not go any higher because “there is no possibility of market acceptance for US goods exported to China” — an acknowledgement that almost no imports are possible at the new level.

Beijing also said it would file a lawsuit with the World Trade Organization over the latest round of levies announced by Trump.

Chinese President Xi Jinping condemned “unilateral bullying”.

While the superpowers clash, the European Union (EU) said its trade chief Maros Sefcovic would hold talks with US counterparts in Washington on Monday to resolve their own tariffs spat.

Sefcovic is travelling “in good faith to try and find solutions that can benefit us all,” EU trade spokesperson Olof Gill said.