BEIJING — In a significant response to President Trump’s broad tariffs on Chinese goods, China announced new tariffs on select American products and launched an antitrust investigation into Google, alongside additional trade measures. The U.S. tariffs on imports from Canada and Mexico were set to take effect Tuesday; however, Trump opted for a 30-day moratorium while Canada and Mexico sought to address his concerns regarding border security and drug trafficking. Plans for a discussion between Trump and Chinese President Xi Jinping are on the horizon.
Experts claim China’s reaction appears to be carefully calculated. John Gong, a professor at the University of International Business and Economics in Beijing, noted that the response is “measured,” suggesting China aims to avoid escalating the trade conflict and might see parallels in the negotiations with Canada and Mexico, hoping for a favorable outcome similar to theirs.
Historically, this is not the first instance of retaliatory measures from both nations. The trade war initiated in 2018 when Trump imposed tariffs on Chinese goods, which prompted a reciprocal response from China. Analysts indicate that this time, China is significantly better equipped to respond effectively, as it has rolled out a range of measures affecting various economic sectors, from energy to specific U.S. companies.
As part of its tariff strategy, China revealed plans to impose a 15% tariff on coal and liquefied natural gas (LNG), along with a 10% tariff on crude oil, agricultural machinery, and large-engine cars imported from the U.S. These tariffs are scheduled to come into effect next Monday. The State Council Tariff Commission stated that the U.S.’s unilateral tariff increases breach World Trade Organization rules and are detrimental to economic and trade relations between the two countries.
Impact on U.S. exports may be minimal, however. The U.S. is the world’s leading exporter of LNG, yet its shipments to China remain relatively modest, comprising about 2.3% of total natural gas exports in 2023. Additionally, China imported only approximately 700,000 cars last year, predominantly from European and Japanese manufacturers, diminishing the potential impact further.
In conjunction with the tariffs, China introduced export controls on several vital materials critical for high-tech manufacturing, including tungsten, tellurium, bismuth, molybdenum, and indium. The U.S. Geological Survey classifies these as essential minerals for national and economic security, which makes their supply chains susceptible to disruption. These measures build on export controls China established in December for elements such as gallium.
Philip Luck, an economist at the Center for Strategic and International Studies, commented on China’s advanced export control system, pointing out the U.S.’s significant reliance on these minerals, and warned that these controls could inflict serious damage on the American economy.
Moreover, the State Administration for Market Regulation in China announced an investigation into Google, suspecting breaches of antitrust regulations. This announcement coincided closely with the implementation of Trump’s tariffs, although it remains unclear how this investigation may influence Google’s operations. Complaints from Chinese smartphone manufacturers regarding Google’s handling of the Android operating system have been ongoing. Google has a minimal presence in China as its search engine is blocked, and the company withdrew from the Chinese market in 2010 in response to censorship demands and cyberattacks.
Additionally, the Commerce Ministry listed two U.S. companies, including PVH Group — parent company of Calvin Klein and Tommy Hilfiger — and Illumina, a biotech firm. This designation could restrict their ability to participate in trade with China or make new investments there. The investigation into PVH Group stems from alleged improper actions concerning Xinjiang cotton.
The Chinese response has been viewed as strategic and cautious with looming risks associated with an escalating trade dispute. According to Stephen Dover, chief market strategist at the Franklin Templeton Institute, this situation could potentially initiate a trade war that may lead to slower GDP growth globally, increased inflation in the U.S., a stronger dollar, and upward pressures on interest rates.
