KEY POINTS
- The US imposed a 10% tariff on Chinese goods
- China responds with levies of up to 15% on US energy and vehicles.
- Trump deferred tariffs on Mexico and Canada for 30 days.
- Stock markets fluctuate as investors brace for uncertainty over trade disputes.
- Beijing launches a probe into Google and imposes export controls on rare earth metals.
- China plans to file a complaint with WTO against US tariffs.
- Mexico deploys 10,000 troops, and Canada appoints a “Fentanyl Czar” to curb drug trafficking.
WASHINGTON: US President Donald Trump and Chinese President Xi Jinping are expected to speak by phone on Tuesday, just hours after imposing fresh tariffs on each other’s economies in a rapidly intensifying trade war.
Beijing said it was imposing levies on imports of US energy, vehicles and equipment in a return salvo minutes after Trump’s threatened tariffs on Chinese goods came into effect.
Trump suspended tariffs on Mexico and Canada on Monday for a month after they vowed to step up measures to counter flows of the drug fentanyl and the crossing of undocumented migrants into the United States.
Stock markets wavered on Tuesday as investors braced for volatile market activity in the coming weeks over Trump’s threatened tariffs on the three biggest US trading partners.
“Let’s see what happens with the call today,” Trump trade advisor Peter Navarro, a veteran of the US president’s first term, told news outlet Politico.
Asked if Trump could halt the tariffs on China too, he added: “It’s up to the boss. I never get ahead of the boss, that’s why I’m sitting here.”
Trump imposed fresh 10 percent tariffs on Chinese goods, on top of levies that were already in place against America’s biggest economic competitor. Mexico and Canada had faced 25 percent tariffs.
White House Press Secretary Karoline Leavitt said on Monday that Trump was due to talk to Xi, but said Tuesday that “I don’t have any updates on when that call will take place.”
“He is not going to allow China to continue to source and distribute fentanyl into our country, that was the reason for this tariff,” Leavitt told reporters outside the West Wing.
Escalating trade war
China unveiled levies of 15 percent on imports of coal and liquefied natural gas from the United States, while crude oil, agricultural machinery, big-engined vehicles, and pickup trucks face 10 percent duties.
It says it will also probe US tech giant Google and the American fashion group which owns Tommy Hilfiger and Calvin Klein.
Beijing said the measures were in response to the “unilateral tariff hike” by Washington. It said it would also file a complaint to the World Trade Organization over the “malicious” levies.
It also unveiled fresh export controls on rare metals and chemicals including tungsten, tellurium, bismuth, and molybdenum, used in a range of industrial appliances.
China is a major market for US energy exports and according to Beijing customs data, imports of oil, coal and LNG totalled more than $7 billion last year.
But that is dwarfed by China’s imports from more friendly powers such as Russia, from which it purchased $94 billion-worth last year.
Last-minute deals
Trump has made tariffs a key foreign policy tool of his second term, joking that the word tariff is the “most beautiful” in the dictionary.
The Republican billionaire said his tariffs aimed to punish countries for failing to halt flows of illegal migrants and drugs including the powerful opioid fentanyl into the United States.
Mexican President Claudia Sheinbaum and Canadian Prime Minister Justin Trudeau had both struck last-minute deals with Trump on Monday to tighten border measures, leading to a 30-day pause on threatened tariffs.
ALSO READ: China Retaliates Against Trump’s Trade War by Imposing Tariff on US Energy Imports
Talks will continue for the next month on broader deals.
Mexico said it had begun the 10,000-strong border troop deployment it had promised Trump as part of the agreement to halt tariffs.
“The deployment has already started,” Sheinbaum told reporters.
More than 450,000 people have been murdered countrywide since Mexico launched a major offensive against drug cartels in 2006.
Trudeau meanwhile said Canada would appoint a “Fentanyl Czar” and list drug cartels as terrorist organizations.
Trump’s tariffs
On February 1, 2025, the Trump administration announced a 25% tariff on imports from Canada and Mexico, alongside a 10% levy on Chinese goods.
While the tariffs on Canada and Mexico have been deferred for a month following agreements to enhance border security and combat drug trafficking, the duties on Chinese imports took effect immediately.
China’s calculated retaliation
In response, China has implemented its own tariffs on a select range of US products totalling $14 billion, effective February 10. These tariffs, ranging from 10% to 15%, target liquefied natural gas (LNG), coal, crude oil, and agricultural machinery.
Additionally, Beijing has initiated an antitrust investigation into Google and imposed export controls on rare earth metals, essential components in various technologies. Analysts interpret China’s measured response as an indication of its desire to negotiate rather than escalate tensions further.
