Beijing February 4 2025: China on Tuesday said it would impose fresh tariffs on U.S. imports in swift retaliation to new U.S. duties that came into effect on Chinese goods.
China’s finance ministry said that, starting Feb. 10, it would impose levies of 15% for U.S. coal and 10% for crude oil, farm equipment and some cars. The announcement came just minutes after an additional 10% tariff across all Chinese imports into the U.S. came into effect at 12:01 a.m. ET on Tuesday.
The moves by Beijing and Washington escalate tensions between the world’s top two economies and effectively renew a trade war that began in 2018 during President Donald Trump’s first term.
The latest levies also follow Trump’s offer, in a series of last-minute phone calls, to give 30-day reprieves to Mexico and Canada, the U.S.’s two largest trading partners, on proposed tariffs.
Tariffs are essentially taxes charged on goods imported from another country. They are typically set at a percentage of the goods’ value and usually paid by the importer. The extra costs are generally passed on to the consumer.
Trump has repeatedly said the Chinese tariffs are needed because Beijing is not doing enough to halt the flow of illicit drugs like fentanyl, a deadly opioid, into the U.S. China disputes this.
“China hopefully is going to stop sending us fentanyl, and if they’re not, the tariffs are going to go substantially higher,” Trump said on Monday.
Trump has acknowledged that Americans could feel “some pain” from his tariffs.
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. The U.S. is a relatively small source of crude oil for China, accounting for 1.7% of its imports last year, worth about $6 billion.
“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.
Canada, Mexico trade war paused
Trump initiated the trade war with China in his first term because of China’s massive U.S. trade surplus. It fit with his “America First” agenda. The resulting tit-for-tat tariffs on hundreds of billions of dollars worth of goods upended global supply chains and damaged the world economy. Former President Joe Biden kept some of those tariffs in place and even increased some of them, though his administration targeted China’s technology sector.
As part of its Tuesday announcement, China’s foreign ministry said it was starting an anti-monopoly investigation into Alphabet Inc.’s Google. It also included PVH Corp, the holding company for brands including Calvin Klein, and U.S. biotech company Illumina, on its “unreliable entities list,” a designation that can damage a firm’s competitiveness by subjecting it to fines and making it harder for foreign employees to get visas. China’s commerce ministry accused the firms of “discriminatory measures against Chinese enterprises,” without elaborating.
Both Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum said they had agreed to bolster border enforcement efforts after speaking with Trump on the phone about his demand to crack down on immigration and drug smuggling. That would pause 25% tariffs due to take effect on Tuesday for 30 days.
Canada agreed to deploy new technology and personnel along its border with the U.S. 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.
If tariffs on goods from Mexico take effect, Americans may have to pay more for some fruits, vegetables and alcohol products. Tariffs on Canadian goods could lead to higher prices for steel, lumber and grains.
Trump suggested on Sunday the 27-nation European Union would be his next target but did not say when. 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 hinted that Britain, which left the EU in 2020, might be spared tariffs.
“Unlike Canada and Mexico, it is clearly harder for the U.S. and China to agree on what Trump demands economically and politically,” said Gary Ng, senior economist at Natixis in Hong Kong.
