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Chinese leader Xi Jinping has said his nation is “not afraid,” in his first public comment on the escalating trade war with the United States, as Beijing raised tariffs on US goods to 125%.

Trump’s tariffs have redirected billions of dollars in exports originally bound for the U.S. to other markets.

While the White House is waging a trade war on behalf of US manufacturing, the largest and most important part of the US economy, one that has a trade surplus, not a gap, is under threat.