China has introduced new tariffs on a variety of American imports and launched an antitrust investigation into Google in response to President Donald Trump’s latest trade measures.
Beijing announced additional tariffs ranging from 10% to 15% on U.S. liquefied natural gas, coal, crude oil, and agricultural equipment, set to take effect on February 10. Furthermore, tariffs will be imposed on certain American automobile imports, along with stricter export controls on rare metals.
These countermeasures were revealed as Trump’s new 10% tariffs on Chinese goods came into force after midnight on Tuesday in Washington. The U.S. president had described these tariffs as the initial step in a broader trade dispute.
Trump is expected to engage in discussions with Chinese President Xi Jinping in the near future, raising hopes that both nations might negotiate a resolution to avoid escalating tensions between the world’s two largest economies.
In financial markets, Hong Kong’s Hang Seng index initially surged by 3.3% before settling at a 2.7% gain. Meanwhile, the offshore renminbi appreciated slightly to Rmb7.32, and oil prices dipped approximately 1%.
Analysts at Oxford Economics viewed China’s immediate reaction as largely symbolic, noting that the effective tariff rate on U.S. imports would increase by only 2 percentage points.
Additionally, Beijing’s antitrust authority has launched an investigation into Google over potential anti-monopoly violations. Although Google’s core services are restricted in China, its parent company, Alphabet, benefits from advertising revenue generated by Chinese businesses targeting global markets. Moreover, many Chinese smartphone manufacturers rely on Google’s Android operating system, a longstanding concern for Chinese officials wary of American influence over essential software.
The Trump administration had previously barred Huawei from accessing Google’s software ecosystem, which significantly impacted the Chinese tech giant’s smartphone sales outside China.
Commenting on these developments, Louise Loo, China’s lead economist at Oxford Economics, remarked that the trade war appeared to be in its early stages.
Trump’s decision to impose tariffs on Canada, Mexico, and China has raised concerns among investors and political allies. He justified the move by citing inadequate measures to curb illegal immigration and the flow of fentanyl into the U.S.
However, following last-minute discussions with Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum, the tariffs on Canada and Mexico have been temporarily suspended for a month.
China’s Ministry of Finance criticized the U.S. tariffs as a violation of World Trade Organization rules, arguing that they neither address America’s domestic challenges nor support constructive trade relations.
The ministry stated that U.S. coal and LNG exports would be subject to a 15% tariff, while crude oil, farm machinery, and automobile imports would face a 10% duty. Notably, China was the second-largest buyer of American coal during the first three quarters of 2024, accounting for 10.9% of total U.S. coal exports, following India. In the same period, China imported 2.9% of U.S. natural gas exports, according to data from the U.S. Energy Information Administration.
The White House has yet to issue an official response.
On Tuesday, China’s Commerce Ministry also announced immediate export restrictions on tungsten and over two dozen other rare metal products and technologies. In addition, Beijing placed U.S. biotech firm Illumina and clothing conglomerate PVH Group, which owns brands like Calvin Klein and Tommy Hilfiger, on its “unreliable entity list,” effectively blacklisting them for national security reasons.
PVH had previously been investigated for allegedly discriminating against cotton sourced from Xinjiang, a region where Chinese authorities have been accused of human rights violations, including forced labor.
Despite the escalating trade measures, some analysts believe a resolution may still be possible. Chris Beddor, deputy research director for China at Gavekal, described China’s latest actions as non-escalatory, suggesting Beijing is seeking negotiations rather than outright conflict. He also noted that the antitrust inquiry into Google serves as a strategic bargaining chip, akin to China’s prior scrutiny of U.S. semiconductor giant Nvidia.
However, other economists remain skeptical about the likelihood of a compromise. Robin Xing, chief China economist at Morgan Stanley, warned that the path to de-escalation remains narrow and would demand considerable concessions from both sides.
