China will raise their tariffs on American goods to 84 percent on Thursday after President Trump raised his tariffs on Chinese imports to 104 percent on Wednesday morning. Though the administration was able to dodge another ‘Black Monday,’ the new import taxes from both countries threaten to spook investors and expand the new trade war. 

“China urges the U.S. to immediately correct its wrong practices, cancel all unilateral tariff measures against China and properly resolve differences with China through equal dialogue on the basis of mutual respect,” the Chinese state commission on tariffs said on Wednesday. 

China originally raised its tariffs on American goods to 34 percent after Mr. Trump hit the country with a 54 percent tariff. Following the Chinese retaliation, Mr. Trump hit back again, slapping them with a 104 tariff that went into effect on Wednesday morning. 

White House press secretary Karoline Leavitt was asked about the new China tariffs on Tuesday. “It was a mistake for China to retaliate. The president, when America is punched, he punches back harder,” she said, declaring that the president would not back down. 

When Mr. Trump first announced he would raise tariffs on Chinese imports to 54 percent, the Chinese government called on America to drop their new trade barriers and rescind their “bullying” tactics. 

​​“This is a typical act of unilateralism, protectionism and economic bullying. Under the guise of ‘reciprocity’ and ‘fairness,’ the United States is playing a zero-sum game to pursue in essence ‘America First’ and ‘American exceptionalism,’” China’s foreign ministry said in a statement. “It attempts to exploit tariffs to subvert the existing international economic and trade order and put U.S. interests above the common good of the international community.”

The tariffs aren’t the only potential problem for the stock market on Wednesday. The House is set to kill a Senate-passed budget framework this week over the objections of House spending hawks because of the lack of significant cuts to federal spending. 

This budget framework — which is the vehicle for Mr. Trump’s tax cuts — failing on the House floor could have serious consequences for the stock market. Tuesday marked the fourth straight day of losses for the Dow, the S&P 500, and the Nasdaq, and if the resolution — which is the vehicle for Mr. Trump’s new tax cuts — fails this week, then it could spook investors even more. 

As of Tuesday morning, all three major indices’ futures were down, implying a loss of nearly two percent at the open for all three on Wednesday morning. Secretary Bessent will be on Capitol Hill on Wednesday to meet with members of Congress about the escalating trade war.