China has responded to U.S. tariffs imposed by former President Donald Trump with a set of countermeasures, including tariffs on select American imports and an antitrust investigation into Google. These measures were announced alongside new export controls on critical minerals.
Trump had imposed tariffs on Chinese goods, prompting China to retaliate with its own tariffs and trade restrictions. Meanwhile, planned tariffs on imports from Canada and Mexico were delayed by 30 days as those countries worked to address U.S. concerns regarding border security and drug trafficking. Trump also planned discussions with Chinese President Xi Jinping in the coming days.
China’s response was described as “measured” by John Gong, a professor at the University of International Business and Economics in Beijing, suggesting that China aims to prevent further escalation while hoping for a resolution similar to that of Canada and Mexico.
Counter Tariffs
China announced tariffs on various U.S. goods, including a 15% tariff on coal and liquefied natural gas and a 10% tariff on crude oil, agricultural machinery, and large-engine cars. These tariffs are set to take effect next Monday. According to the Chinese government, the U.S. tariff hikes violate World Trade Organization (WTO) rules and harm normal trade relations. However, analysts suggest the direct impact on U.S. exports may be limited since China imports relatively small amounts of U.S. liquefied natural gas and American-manufactured cars.
Export Controls on Critical Minerals
China also introduced export restrictions on key minerals essential to high-tech production, including tungsten, tellurium, bismuth, molybdenum, and indium. These elements are considered critical to U.S. national security and economic stability. This move follows China’s previous restrictions on gallium and germanium in December.
Impact on U.S. Companies
China’s State Administration for Market Regulation launched an antitrust investigation into Google, citing potential violations of competition laws. Though Google has minimal operations in China, this move coincided with the U.S. tariff increases.
Additionally, China placed PVH Group (owner of Calvin Klein and Tommy Hilfiger) and biotech company Illumina on an unreliable entities list, potentially restricting their trade and investment activities in the country. PVH Group had been under investigation for its stance on Xinjiang cotton.
Economists warn that these trade tensions could lead to lower global GDP growth, increased U.S. inflation, and rising interest rates.