China has imposed retaliatory tariffs on US imports, swiftly answering new US duties on Chinese goods and reigniting a trade war between the world’s two largest economies.
The escalation came as President Donald Trump granted a temporary reprieve to Mexico and Canada, delaying planned tariffs on both neighbours.
The additional 10% US tariff on all Chinese imports took effect at 12:01 a.m. ET (05:01 GMT) on Tuesday, after Trump warned Beijing it was not doing enough to curb the flow of illicit drugs, particularly fentanyl, into the United States.
In response, China’s Finance Ministry announced tariffs of 15% on US coal and liquefied natural gas (LNG), and 10% on crude oil, farm equipment, and some automobiles, set to take effect on February 10.
The ministry also revealed an anti-monopoly probe into Alphabet Inc.’s Google and placed US firms PVH Corp, the parent company of Calvin Klein, and biotechnology company Illumina on its “unreliable entities list.”
Additionally, China’s Commerce Ministry and Customs Administration imposed export controls on key rare earth metals, including tungsten, tellurium, ruthenium, and molybdenum, citing national security concerns. China dominates global supply chains for these materials, which are critical for clean energy technology.
While Trump temporarily paused 25% tariffs on Canada and Mexico after securing concessions on border and crime enforcement, he made it clear that no such reprieve was in store for China.
The White House confirmed that Trump would not speak with Chinese President Xi Jinping until later in the week.
Trump warned that if Beijing failed to curb the flow of fentanyl into the US , he could escalate the trade war further.
“China hopefully is going to stop sending us fentanyl, and if they’re not, the tariffs are going to go substantially higher,” Trump said Monday.
China has consistently argued that fentanyl is America’s problem and vowed to challenge the tariffs at the World Trade Organisation while keeping the door open for negotiations.
The financial markets responded swiftly to the trade tensions. Stocks in Hong Kong pared gains following China’s retaliation, while the US dollar strengthened. The Chinese yuan weakened, dragging down the Australian dollar as well.
Oxford Economics warned that the renewed trade war could lead to further economic disruption. “The trade war is in the early stages, so the likelihood of further tariffs is high,” the firm said in a note, downgrading its forecast for China’s economic growth.
Gary Ng, senior economist at Natixis in Hong Kong, said the US -China dispute remained complex. “Unlike Canada and Mexico, it is clearly harder for the US and China to agree on what Trump demands economically and politically. The previous market optimism on a quick deal still looks uncertain,” he said.
He added that tariffs could become a “recurrent tool,” fueling market volatility throughout the year.
Although China is not heavily reliant on US crude oil—importing only 1.7% of its supply from the US last year, worth about $6 billion—the stakes are higher for LNG.
In 2019, China retaliated against US tariffs by slapping punitive duties on LNG. With China importing 4.16 million tons of US LNG in 2024, worth $2.41 billion—nearly double the 2018 volume—further restrictions could significantly impact American energy producers.
While tensions escalated with China, relief came for Canada and Mexico. Both nations agreed to step up border security measures to avoid Trump’s threatened tariffs, which were set to take effect Tuesday but have now been postponed for 30 days.
Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum confirmed new commitments on border enforcement and crime prevention. Canada pledged to deploy new technology and personnel to combat organised crime, fentanyl smuggling, and money laundering. Mexico agreed to station 10,000 National Guard troops along its northern border to curb illegal migration and drug trafficking.
“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.
Industry leaders in Canada welcomed the delay. “That’s very encouraging news,” said Chris Davison, head of a trade group representing Canadian canola producers. “We have a highly integrated industry that benefits both countries.”
Trump has suggested that the European Union could be his next trade target, though he has not provided a timeline. EU leaders, meeting in Brussels on Monday, signaled they were prepared to retaliate if the US imposed tariffs but called for diplomacy.
“The US is the EU’s largest trade and investment partner,” one EU official noted. “We must act with reason and negotiation.”
Trump hinted that Britain, which left the EU in 2020, might be exempt from potential tariffs.
Acknowledging the economic risks, Trump admitted over the weekend that tariffs could cause “some short-term pain” for US consumers but argued they were necessary to curb illegal immigration, fight drug trafficking, and strengthen domestic industries.
Boluwatife Enome
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