Donald Trump‘s Treasury Secretary issued a stark warning to China that it has made a ‘big mistake’ by escalating the bitter tariff feud.

‘I think it was a big mistake, this Chinese escalation, because they’re playing with a pair of twos,’ Scott Bessent told CNBC’s Squawk Box on Tuesday morning. 

‘We are the deficit country. What do we lose by the Chinese raising tariffs on us? We export one-fifth to them of what they export to us, so that is a losing hand for them.’

Beijing vowed to fight the president’s tariffs to ‘the end’ and imposed 34 percent tariffs on U.S. products in response to the 34 percent imposed on them by the White House. 

Trump, meanwhile, doubled down, saying he would add an additional 50 percent charge on U.S. imports from China on Wednesday, if Beijing doesn’t take back its 34 percent.

China, the world’s second-largest economy, called Trump’s tariffs ‘completely groundless’ and ‘a typical unilateral bullying practice.’

Beijing said they would ‘never accept’ the import tax. 

‘The U.S. threat to escalate tariffs on China is a mistake on top of a mistake and once again exposes the blackmailing nature of the U.S. China will never accept this. If the U.S. insists on its own way, China will fight to the end,’ its Commerce Ministry said.

In 2024, the U.S. ran a nearly $300 billion trade deficit with China, or about one-third of the entire imbalance. 

But Trump’s 34 percent tariffs on China were on top of the 20 percent import taxes rolled out since February, bringing the total new tariffs this year on China to 54 p[ercent. 

If Trump adds the new tariffs he is threatening on Chinese products, U.S. tariffs on Chinese goods would reach a combined 104 percent.

The situation could lead to massive price increases for American shoppers for iPhones, computers and toys.

President Trump has shown little sign of backing down.

‘All talks with China concerning their requested meetings with us will be terminated!,’ he said on Truth Social Monday.

The European Union is getting involved.

EU Commission President Ursula von der Leyen called on China to work with them on solutions to the global challenges presented by Trump tariffs.

During a phone call with Chinese Prime Minister Li Qiang on Tuesday, Von der Leyen ‘stressed the responsibility of Europe and China, as two of world’s largest markets, to support a strong reformed trading system, free, fair and founded on a level playing field,’ her office said in a readout of the call.

The tit-for-tat war comes as other nations scramble to negotiate with Trump over his massive tariff hike on foreign products. 

Bessent told CNBC that the administration has heard from over 70 countries. He said Japan has been at the forefront but the White House expects to hear from many others.

‘I think you are going to see some very large countries with large trade deficits come forward very quickly,’ Bessent said. ‘If they come to the table with solid proposals, I think we can end up with some good deals.’

Trump will be personally involved in trade negotiations, he noted.

‘Everything is on the table,’ Bessent said.

Japanese Prime Minister Shigeru Ishiba reached out to Trump on Monday and asked him rethink his tariff scheme. 

‘I’ve told the President that Japan has been the biggest investor in the United States for five straight years and the tariff policies could hurt Japanese companies’ investment capabilities,’ Ishiba told reporters after the call with Trump. 

Other nations are working on plans to counter Trump, however.

The EU is working on a plan that could be ready as early as next week to hit back against auto export levies and a 20 percent tariff on goods from the bloc.

This comes as EU member states prepare to vote on a first round of levies designed to counter 25 percent tariffs on steel and aluminum exports to the U.S. 

Trump’s tariff announcement sent the world markets in a tail spin. The markets from Tokyo to New York have become more unstable as the tariff war worsens and many economists warn a recession could be on the horizon.

But the president continues to defend his dramatic tariffs despite three days of heavy losses in the stock market.