China imposed tariffs on some US imports on Tuesday, the 4th of February, in a swift response to new US tariffs on Chinese goods, reigniting a trade war between the world’s two largest economies, even though President Donald Trump lifted his threat to impose tariffs on Mexico and Canada for 30 days, reports Reuters.
The additional 10% tariff on all Chinese imports into the US came into force at midnight on Tuesday after Trump repeatedly warned Beijing that it was not doing enough to stop the flow of illegal drugs into the US.
Minutes after that, China’s finance ministry said it would impose a 15% tax on US coal and liquefied natural gas and a 10% tax on crude oil, farm machinery and some cars.
China also announced that it is launching an anti-monopoly investigation into Google. It also added Calvin Klein’s parent company PVH Corp and the US biotechnology company Illumina to its list of “untrustworthy companies”.
Separately, China’s Ministry of Commerce and its Customs Administration announced that it was introducing export controls on certain rare earths and metals that are vital for electronics, military equipment and solar panels.
China announced that it is imposing a 10% tax on electric vehicles imported from the US, which could also apply to future sales of Elon Musk’s cybertruck, which Tesla has been promoting in China.
CHINA’S NEW TARIFFS ON US EXPORTS WILL TAKE EFFECT ON THE 10TH OF FEBRUARY, GIVING WASHINGTON AND BEIJING SOME TIME TO TRY TO REACH AN AGREEMENT, THE MINISTRY SAID.
Trump plans to speak to Chinese President Xi Jinping this week, a White House spokesman said.
Trump has warned that he could further increase tariffs on China unless Beijing stops the flow of the deadly opioid fentanyl into the US.
“Hopefully China will stop sending us fentanyl, and if they don’t, the tariffs will go up significantly,” he said on Monday.
China has called fentanyl an America’s problem and said it would challenge the tariffs at the World Trade Organisation and take other retaliatory measures, but is also open to talks.
The US is a relatively small source of crude oil for China, accounting for 1.7% of its imports last year, worth around six billion US dollars. Just over 5% of China’s LNG imports come from the US.
Trump on Monday suspended his last-minute threat to impose 25% tariffs on Mexico and Canada, agreeing to a 30-day pause in exchange for compromises on border controls and crime with the two neighbours.
Canada agreed to deploy new technology and personnel on its border with the US and to start cooperating in the fight against organised crime, fentanyl smuggling and money laundering.
Mexico agreed to reinforce its northern border with 10 000 National Guardsmen to stem the flow of illegal migration and drugs.
Trump said his next target would be the European Union, but did not say when tariffs might be imposed.
EU leaders said at an informal summit in Brussels on Monday that Europe would be ready to react if the US imposed tariffs but also called for understanding and negotiation. The US is the EU’s largest trading and investment partner.
Trump implied that the UK, which left the EU in 2020, might not be subject to tariffs.
Following China’s retaliatory measures, crude oil prices continued to fall, down to 2%, and Hong Kong shares also fell. The dollar strengthened, while the Chinese yuan, the euro, the Australian and Canadian dollars and the Mexican peso depreciated, reflecting growing market concerns about the risk of a protracted global trade war.