China’s retaliatory tariffs on US goods officially came into effect on Monday, signaling a new escalation in the ongoing trade war between the world’s two largest economies. This development follows closely on the heels of Washington’s imposition of fresh tariffs on Chinese products, as tensions rise over trade imbalances, technology disputes, and geopolitical rivalry.
Beijing announced its countermeasures on February 4, just minutes after the US levied a 10% tariff on all Chinese imports. In response, China introduced a series of import taxes targeting key American industries, including a 15% border tax on US coal and liquefied natural gas (LNG) products. Additionally, American crude oil, agricultural machinery, and large-engine vehicles are now subject to a 10% tariff, further straining sectors heavily reliant on exports to China.
The tit-for-tat measures come against the backdrop of US President Donald Trump’s latest announcement over the weekend, where he declared plans to impose a 25% tariff on all steel and aluminum imports into the US. Trump, speaking aboard Air Force One en route to the Super Bowl, hinted at reciprocal tariffs on other countries without specifying which nations might be affected.
China’s response extends beyond tariffs. Last week, Chinese regulators launched an anti-monopoly investigation into US tech giant Google, signaling that the trade conflict is spilling into the tech sector. Furthermore, PVH Corp., the American parent company of Calvin Klein and Tommy Hilfiger, has been added to Beijing’s “unreliable entity” list, a designation that could restrict its operations within China.
Adding to the complexity, China has imposed new export controls on 25 rare metals critical for manufacturing electronic devices and military equipment. This move could disrupt global supply chains, particularly in industries dependent on these rare earth elements.
While Trump’s latest tariff threats echo his first term’s aggressive trade policies, including the imposition of 25% tariffs on steel and 10% on aluminum, he had previously granted exemptions to key allies such as Canada, Mexico, and Brazil. Deals with Canada and Mexico have recently averted similar tariffs, but it remains unclear if any countries will receive exemptions under the new measures.
The European Union (EU), which faced unresolved tariff disputes until the Biden administration assumed office, is once again under scrutiny. Trump hinted at potential tariffs on EU goods, citing unfair practices, particularly in the automotive sector. He criticized the EU’s higher tariffs on American cars compared to US levies on European vehicles, though he suggested that a trade deal with the UK could be negotiated soon.
China has formally lodged a complaint with the World Trade Organization (WTO), accusing the US of imposing “discriminatory and protectionist” tariffs that violate global trade rules. However, with the WTO’s dispute resolution panel currently hamstrung, Beijing’s chances of securing a favorable ruling remain slim.
Despite rising tensions, Trump has indicated he is not in a rush to engage directly with Chinese President Xi Jinping. Experts believe that China is better prepared for this round of economic confrontation compared to Trump’s first term. “China’s economy may have slowed cyclically, but their technological capabilities are significantly stronger, and they’ve diversified their trade partnerships,” said Scott Kennedy of the Center for Strategic and International Studies.
Interestingly, amidst the escalating rhetoric, Trump suspended tariffs on small packages from China, a move that took effect alongside the new 10% tariffs on February 4. This suspension will remain until US agencies can efficiently process and collect tariff revenues. The decision initially caused confusion, with the US Postal Service halting and then quickly resuming the acceptance of packages from China.
As the trade war deepens, businesses on both sides of the Pacific are bracing for economic turbulence. The long-term impact on global markets, supply chains, and international relations remains uncertain, with both Washington and Beijing showing little sign of backing down.
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