China has retaliated against President Donald Trump’s tariffs by implementing some of its own, renewing a trade war between the world’s top two economies.
The measures, announced by China’s Finance Ministry, levy a 15 percent duty on certain types of coal and liquefied natural gas and a 10 percent tariff on crude oil, agricultural machinery, large-displacement cars and pickup trucks.
Separately, China’s Commerce Ministry and its Customs Administration said the country is imposing export controls on tungsten, tellurium, ruthenium, molybdenum and ruthenium-related items to safeguard national security interests.
China will further probe Google for alleged anti-trust violations, according to a statement from the State Administration for Market Regulation, though the specifics of the probe remain unclear.
The tariffs would go into effect next Monday, but were announced the same day Trump implemented his 10 percent tariffs on all Chinese imports to the United States.
The move came as President Trump secured border protection agreements from both Canada and Mexico following a whirlwind day that began with a cratering stock market and the threat of a trade war.
Yet there was no such reprieve for China, and a White House spokesperson said Trump would not be speaking with Chinese President Xi Jinping until later in the week.
China announced its own tariffs against American goods on Monday, as the United States’ tariffs against China went into effect
During his first term in 2018, Trump initiated a brutal two-year trade war with China over its massive U.S. trade surplus, with tit-for-tat tariffs on hundreds of billions of dollars worth of goods, upending global supply chains and damaging the world economy.
To end that trade war, China agreed in 2020 to spend an extra $200billion-a-year on U.S. goods – but that plan was derailed by the COVID pandemic.
Its annual trade deficit then widened to $361billion, according to Chinese customs data released last month.
‘The trade war is in the early stages so the likelihood of further tariffs is high,’ Oxford Economics said in a note as it downgraded its China economic growth forecast.
Trump has now warned he might increase tariffs on China further unless Beijing stemmed the flow of fentanyl, a deadly opioid, into the United States.
‘China hopefully is going to stop sending us fentanyl, and if they’re not, the tariffs are going to go substantially higher,’ he said on Monday.
China has called fentanyl America’s problem and said it would challenge the tariffs at the World Trade Organization and take other countermeasures, but also left the door open for talks.
But as the tariffs took effect in China on Monday, the offshore yuan dropped 0.3 percent, to 7.3340 as its trading closed ahead of the Lunar New Year, the Economic Times reports.
President Donald Trump has insisted that the economic ‘pain’ from his global trade war is ‘worth the price’ to create a ‘golden age of America’
Meanwhile, there was relief in Ottawa and Mexico City, as well as global financial markets, after the deals to avert the hefty tariffs on Canada and Mexico.
Both Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum said they had agreed to bolster border enforcement efforts in response to Trump’s demand to crack down on immigration and drug smuggling. That would pause the 25 percent tariffs due to take effect on Tuesday for 30 days.
Canada also agreed to deploy new technology and personnel along its border with the United States and launch cooperative efforts to fight organized crime, fentanyl smuggling and money laundering.
Mexico agreed to reinforce its northern border with 10,000 National Guard members to stem the flow of illegal migration and drugs.
The United States also made a commitment to prevent trafficking of high-powered weapons to Mexico, Sheinbaum said.
‘As President, it is my responsibility to ensure the safety of ALL Americans, and I am doing just that. I am very pleased with this initial outcome,’ Trump said on social media.
Canada’s Prime Minister Justin Trudeau slammed US President Donald Trump for betraying Canada as he announced Saturday night that his country would put matching 25 per cent tariffs on up to $155billion in US imports, including alcohol and fruit
After speaking by phone with both leaders, Trump said he would try to negotiate economic agreements over the coming month with the two largest U.S. trading partners, whose economies have become tightly intertwined with the United States since the landmark North American Free Trade Agreement was struck in the 1990s.
The Canadian dollar earlier soared after slumping to its lowest in more than two decades. The news also gave U.S. stock index futures a lift after a day of losses on Wall Street, and sent oil prices lower.
Industry groups, fearful of disrupted supply chains, welcomed the pause.
‘That’s very encouraging news,’ said Chris Davison, who heads a trade group of Canadian canola producers. ‘We have a highly integrated industry that benefits both countries.’
Trump has repeatedly said the US does not need imports from Canada, which sends cars manufactured by US automakers south along with lumber and agricultural products
Canada and the US are the only two countries in the world that produce maple syrup on a commercial level with 60 percent of Canada’s production exported to the US
But Trump has also suggested the 27-nation European Union would be his next target, though he has not yet said when that may go into effect.
EU leaders at an informal summit in Brussels on Monday said Europe would be prepared to fight back if the U.S. imposes tariffs, but also called for reason and negotiation. The U.S. is the EU’s largest trade and investment partner.
Trump further hinted that Britain, which left the EU in 2020, might be spared tariffs.
Trump acknowledged over the weekend that his tariffs could cause some short-term pain for U.S. consumers, but says they are needed to curb immigration and narcotics trafficking and spur domestic industries.
He wrote on his Truth Social platform that there ‘maybe’ some pain, as he defended his executive order.
‘But we will Make America Great Again, and it will all be worth the price that must be paid,’ the president wrote.
The tariffs as originally planned would cover almost half of all U.S. imports and would require the United States to more than double its own manufacturing output to cover the gap – an unfeasible task in the near term, ING analysts wrote.
Other analysts said the tariffs could throw Canada and Mexico into recession and trigger ‘stagflation’ – high inflation, stagnant growth and elevated unemployment – at home.