Beijing Retaliates with Levies on U.S. Goods and Launches an Anti-Monopoly Probe into Google
China has wasted no time in hitting back at the United States, announcing fresh tariffs on U.S. imports in a rapid response to the latest round of duties imposed by the Trump administration. The renewed trade war between the world’s two largest economies threatens to send shockwaves through global markets, even as President Donald Trump temporarily spared Canada and Mexico from his tariff onslaught.
At 12:01 AM ET, a 10% tariff on all Chinese imports into the U.S. officially took effect—part of Trump’s aggressive stance against Beijing, which he accused of failing to curb the flow of illicit drugs, particularly fentanyl, into America.
In swift retaliation, China’s Finance Ministry announced levies of 15% on U.S. coal and liquefied natural gas (LNG), along with 10% tariffs on crude oil, farm equipment, and some automobiles. These tariffs are set to take effect on February 10, 2025.
Further escalating tensions, China also launched an anti-monopoly investigation into Google, signaling a broader pushback against American corporate giants. Additionally, PVH Corp—the parent company of Calvin Klein—and U.S. biotech firm Illumina were added to China’s “unreliable entities list.”
Meanwhile, China’s Commerce Ministry imposed export controls on tungsten, tellurium, molybdenum, bismuth, and indium, crucial rare-earth minerals vital to clean energy and high-tech industries. Given China’s dominant hold on global rare earth supplies, this move could have significant repercussions for U.S. manufacturers.
While Canada and Mexico managed to secure a temporary 30-day tariff reprieve after agreeing to border security and crime enforcement measures, China was offered no such concessions. A White House spokesperson confirmed that Trump would not engage with Chinese President Xi Jinping until later in the week, leaving diplomatic resolutions uncertain.
Financial markets reacted swiftly: Hong Kong stocks dipped, the U.S. dollar strengthened, and the Chinese yuan weakened, pulling down the Australian dollar as well.
The latest skirmish reignites tensions reminiscent of the 2018 U.S.-China trade war, which saw both nations slapping tariffs on hundreds of billions of dollars’ worth of goods, disrupting global supply chains, and rattling world markets.
Oxford Economics warned of further escalations, stating that “the likelihood of additional tariffs is high” as the situation develops. Trump has openly threatened even steeper duties if China fails to curb fentanyl shipments to the U.S.
China has dismissed the fentanyl accusations, calling it “America’s problem”, and vowed to challenge Trump’s tariffs at the World Trade Organization (WTO). However, despite its hardline stance, Beijing has left the door open for negotiations, hinting at a possible de-escalation—if the U.S. is willing to engage.
The energy sector is bracing for impact. While U.S. crude oil exports to China make up only 1.7% of China’s total imports, the stakes are higher in the LNG sector. China imported 4.16 million tons of U.S. LNG in 2024, worth $2.41 billion—almost double the volume of 2018. The new tariffs could significantly dent this trade.
Even as the U.S. and China exchange economic blows, Europe could be Trump’s next target. While exact details remain unclear, Trump has signaled that the European Union may face similar trade measures soon. However, he suggested that Britain, which exited the EU in 2020, might be spared.
While China faces an all-out trade battle, Canada and Mexico successfully negotiated a temporary reprieve. In exchange, Canada agreed to deploy advanced border security measures and increase cooperation against organized crime, fentanyl smuggling, and money laundering. Mexico, meanwhile, pledged to station 10,000 National Guard troops at its northern border to curb illegal migration and drug trafficking.
For now, China and the U.S. appear locked in a high-stakes economic showdown, with no immediate resolution in sight. But with the global economy teetering on uncertainty, the world is watching to see who blinks first.