Trade War Escalates: China Announces Retaliatory Tariffs, Tensions Rise with the US
The trade tensions have already started to take a toll on global markets.
ISLAMABAD: In a swift and decisive response to the United States‘ newly imposed tariffs on Chinese imports, China has announced retaliatory measures, marking a fresh escalation in the ongoing trade conflict between the two global superpowers. The new tariffs come after the US placed a 10% duty on all Chinese goods, aimed at curbing the flow of illicit drugs, specifically fentanyl, from China into the United States.
China’s Ministry of Finance revealed on Tuesday that it would impose tariffs on a variety of US products, including coal, liquefied natural gas (LNG), crude oil, agricultural equipment, and some automobiles. These measures, set to take effect on February 10, represent a direct challenge to US imports. The tariffs include a 15% duty on coal and LNG and a 10% tariff on other goods. Alongside these tariffs, China has initiated an investigation into Google for alleged anti-trust violations and added US companies PVH Corp. and Illumina to its “unreliable entities list.”
The escalating trade war comes as President Donald Trump has been intensifying his pressure on China, particularly regarding the opioid crisis. Trump has stated that if China does not cease its fentanyl shipments, tariffs will continue to rise. However, Beijing has rejected the assertion that it is responsible for the opioid crisis, calling the issue an American one, and vowed to challenge the tariffs at the World Trade Organization (WTO). Despite the ongoing standoff, China has left open the possibility for future negotiations.
In a strategic move, China also unveiled new export controls on rare earth materials crucial for global clean energy efforts, including tungsten, tellurium, and molybdenum. These materials, essential to high-tech industries, are primarily controlled by China, amplifying the stakes in the trade war.
The trade tensions have already started to take a toll on global markets. The offshore yuan dropped by 0.3% to 7.3340 against the US dollar in the wake of the tariff announcements. Other currencies, such as the Australian and New Zealand dollars, also experienced declines, while Hong Kong’s stock market saw investors pulling back amid rising uncertainty.
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Oxford Economics has downgraded its growth forecast for China, predicting that the trade conflict will continue to intensify throughout 2025, with further tariffs on the horizon. Analysts warn of growing volatility in the global economy as both the US and China continue to wield tariffs as a political tool.
Meanwhile, in North America, the US decision to delay tariffs on Mexico and Canada has been welcomed by both countries, averting a potential trade crisis. However, Trump’s future tariff threats against the European Union loom large, with EU leaders preparing for possible retaliation.
As the trade war between the US and China shows no signs of easing, the global economy braces for more turbulence, with businesses and consumers facing an uncertain future as international trade relations evolve rapidly.
