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Beijing has announced new tariffs on US goods, including natural gas, oil and electric vehicles. The move was a response to the Donald Trump administration’s decision to impose a 10% duty on all Chinese imports, Reuters reports.
The Ministry of Finance of China announced that starting from 10 February, a 15% duty will be imposed on coal and liquefied natural gas (LNG) from the United States, and a 10% duty on oil, agricultural machinery and certain cars. In particular, the new restrictions may also apply to Tesla’s Cybertruck, which is actively promoted in the Chinese market.
There is still room for diplomatic negotiations
Despite the tough rhetoric, experts point to Beijing’s cautious approach. China’s countermeasures are less extensive than the US duties, which indicates an intention to leave room for diplomatic negotiations. Washington and Beijing have a few weeks to find a compromise before the new tariffs come into force.
Trump is expected to personally discuss the issue with Chinese President Xi Jinping in the coming days. However, history shows that such talks rarely lead to a quick resolution of trade disputes.
The fentanyl and energy markets factor
The Trump administration explains the new duties as a way to force China to stop exporting fentanyl, a powerful opioid that has caused numerous deaths in the US. If Beijing does not respond, Washington is ready to increase economic pressure.
However, as economists point out, the effectiveness of Chinese tariffs may be limited. Despite its status as the largest energy importer, China buys only 1.7% of US oil and 5.4% of liquefied natural gas. At the same time, redirecting LNG to European markets could create new opportunities for players such as Australia.
New frontier: antitrust investigation against Google
China also announced the launch of an antitrust investigation against Alphabet, the parent company of Google. In addition, the US holding PVH Corp (owner of Calvin Klein) and the biotechnology corporation Illumina were added to the list of “dangerous companies”.
At the same time, Beijing is introducing controls on the export of rare earth metals, which are key to the production of high-tech devices and the development of green energy.
Canada and Mexico get a temporary pause
Despite a new wave of tension with China, Donald Trump decided to postpone the introduction of 25% tariffs on imports from Canada and Mexico. The deal was made possible by an agreement to strengthen border controls and fight drug smuggling.
In particular, Canada has agreed to expand its anti-money laundering measures, and Mexico has agreed to send 10,000 troops to guard the northern border.
Is Europe the next target of Trump’s attention?
After China and North America, the European Union may be the next target of Trump’s customs policy. The US president has already hinted at the possible introduction of new tariffs, although no official steps have been taken yet.
EU leaders have said they are ready to respond firmly to possible trade restrictions, but hope to negotiate. Meanwhile, the United Kingdom, which left the EU in 2020, may receive an exemption from potential sanctions.
The new round of the trade war between China and the US is just beginning. If the parties do not find a compromise, experts predict further escalation and new economic turmoil for the global market.
