In response to the new U.S. tariffs on Chinese goods, China has swiftly imposed its own tariffs on American imports, reigniting tensions in the trade war between the world’s two largest economies. The U.S. tariffs, which took effect on Tuesday, impose an additional 10% levy on all Chinese imports, prompting China to announce retaliatory measures, including 15% tariffs on U.S. coal and liquefied natural gas (LNG), and 10% tariffs on crude oil, agricultural machinery, and some autos. These new tariffs will be enforced starting February 10.
Along with these tariff measures, China launched an anti-monopoly investigation into Alphabet Inc’s Google and added companies like PVH Corp (owner of brands like Calvin Klein) and biotech firm Illumina to its “unreliable entities” list. Furthermore, China’s Ministry of Commerce imposed export controls on key rare earth materials, such as tungsten and molybdenum, which are vital for clean energy technologies.
The U.S. tariffs on China come at a time when President Donald Trump has offered temporary relief to Mexico and Canada by postponing the planned 25% tariffs on their goods for 30 days, after both countries agreed to enhance border enforcement and tackle drug smuggling.
Trump’s decision to proceed with tariffs on China despite the pauses with Mexico and Canada signals a continued escalation in the trade war. The U.S. tariffs on China were part of Trump’s broader strategy to pressure Beijing into halting the flow of fentanyl into the U.S. The president has warned that if China does not curb fentanyl exports, the tariffs could increase substantially.
While some analysts predict that the U.S.-China trade conflict will remain a source of market volatility throughout the year, others believe that negotiations may be possible in the future. However, past trade talks have failed to yield a quick resolution, and the complexity of the issues at hand means that finding common ground could prove challenging.
In contrast, the U.S. reached agreements with Mexico and Canada to delay tariffs, providing a temporary reprieve for industries that feared disruptions in supply chains. Canadian and Mexican leaders agreed to deploy new technologies and personnel at the border, as well as reinforce efforts to combat drug trafficking and organized crime.
Despite the pause on tariffs with its neighbors, Trump has hinted that the European Union could be his next target, although the timing remains unclear. EU leaders have expressed readiness to retaliate if necessary, but have also called for dialogue and diplomacy to resolve the trade issues.