China retaliated immediately on Tuesday following the implementation of a 10% U.S. tariff on all Chinese goods by announcing its own levies of 10% to 15% on certain U.S. products. The Chinese government stated that starting February 10, additional tariffs of 15% on coal and liquefied natural gas, and 10% on crude oil, agricultural machinery, automobiles, and pickup trucks would be imposed. This move came shortly after the U.S. tariff went into effect, signaling a potential escalation in the ongoing trade war between the two largest economies in the world.
In response to the U.S. tariffs, China criticized the action for violating World Trade Organization rules and stated that it undermines economic and trade cooperation between the two countries. China also announced an investigation into Google for anti-trust violations and imposed export controls on critical components such as rare earth elements. Furthermore, U.S. companies, including Illumina and PVH Corp., were added to the “unreliable entity list,” limiting their operations in China.
Despite discussions with Canada and Mexico resulting in the pause of 25% tariffs, no such deal has been reached with China. President Trump is expected to speak with Chinese leader Xi Jinping in the coming days. The Chinese mainland markets were closed for the Lunar New Year holiday, while other Asia-Pacific markets reacted positively to the temporary halt of Canadian and Mexican tariffs. China has referred the U.S. tariff measures to the World Trade Organization in an effort to protect its rights and interests, criticizing the U.S. for violating WTO rules and engaging in unilateralism and protectionism. The dispute demonstrates the challenges facing the multilateral trading system and global trade relationships.
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