China hits back with tariffs on U.S.imports as trade tensions escalate

China has retaliated against new U.S. tariffs on Chinese goods, imposing levies on key American exports in a move that raises the stakes in the ongoing trade dispute between the world’s two largest economies.

Tit-for-tat tariffs: What’s changing?

As of Tuesday, 12:01 a.m. ET, the U.S. has imposed an additional 10% tariff on all Chinese imports, citing concerns over illicit drug flows into the U.S.. China responded swiftly, with its Finance Ministry announcing new tariffs:
15% on U.S. coal and LNG
10% on crude oil, farm equipment, and large-engine vehicles

China also launched an anti-monopoly investigation into Google (Alphabet Inc.) and placed PVH Corp (Calvin Klein’s parent company) and Illumina on a potential sanctions list. Additionally, export controls on critical metals used in electronics, military equipment, and solar panels were introduced, further escalating the dispute.

Tesla’s Cybertruck caught in the crossfire?

China’s new 10% duty on electric trucks could impact Tesla’s Cybertruck sales, though the automaker has yet to comment.

China’s new tariffs take effect on February 10, leaving a narrow window for negotiations between Washington and Beijing. Chinese officials have expressed interest in striking a deal, but the U.S. stance remains firm.

"If China doesn’t stop fentanyl exports, tariffs will go even higher," Trump said

Meanwhile, global markets reacted sharply, with crude oil prices tumbling 2%, the Chinese yuan weakening, and stocks in Hong Kong losing momentum as fears of an extended trade war mount.

Deals with Canada & Mexico provide relief

In contrast, the U.S. paused its planned 25% tariffs on Mexico and Canada for 30 days after securing concessions on border security and crime enforcement. Canada agreed to deploy new security measures, while Mexico will station 10,000 National Guard troops along its northern border to curb illegal migration and drug smuggling.

“I am very pleased with this initial outcome,” Trump said, highlighting his commitment to protecting American industries and security.

Europe could be next in Trump’s trade war

While Canada and Mexico secured temporary relief, Trump hinted at possible tariffs on European imports, though Britain may be spared. EU leaders have warned they will retaliate if necessary, but remain open to negotiation.

As trade tensions escalate, experts caution that tariffs could become a recurring economic weapon, fueling global market volatility in 2024 and beyond.