In response to Washington’s imposition of tariffs, China said on Tuesday it is imposing new tariffs on US energy, vehicles, and equipment, international media reported. Beijing’s announcement escalates tensions between the world’s two largest economies.
US President Donald Trump imposed a 10% tariff on Chinese goods over the weekend, to go into effect today, adding to already existing duties. Minutes after the tariffs took effect, Beijing retaliated with a 15% levy on US coal and liquefied natural gas (LNG) and a 10% tariff on crude oil, agricultural machinery, and large-engine vehicles.
China, a key market for US energy exports, imported over USD 7 billion worth of oil, coal, and LNG from the US last year, but still relies heavily on Russia, which supplied USD 94 billion in energy exports.
Beijing called Washington’s tariffs a “unilateral tariff hike” and plans to file a complaint with the World Trade Organization, Chinese News Agency Xinhua said.
The global market is feeling the strain of the trade tensions. Stocks of major U.S. tech companies recently took a significant hit following the release of China’s AI chatbot “DeepSeek” in January. The app, which surpassed competitors such as ChatGPT in downloads, sent shares of companies such as Nvidia plummeting by 11%.
Developed in just two months for under USD 6 million, DeepSeek’s success raised concerns that US firms may be losing their dominance in the AI sector, with Chinese developers producing cheaper, high-quality technology.
As the trade conflict intensifies, both sides are preparing for continued negotiations as well as retaliatory measures. China’s trade in services surpassed USD 1 trillion for the first time in 2024, showing the country’s growing economic influence. However, tensions remain high as Beijing takes steps to ensure its competitiveness, from controlling rare metals to further asserting dominance in the global technology space.
Along with imposing its own tariffs on the US, China launched an investigation into US tech giant Google and added PVH Corp., the corporate owner of Tommy Hilfiger and Calvin Klein, to its list of “unreliable entities.” Beijing also imposed new export controls on rare metals and chemicals, including tungsten and molybdenum, essential for industrial production.
While China’s response appears measured, analysts say the trade war could drag on. Zhang Zhiwei of Pinpoint Asset Management noted, “This is likely only the beginning of a long process for the two countries to negotiate.”
Trump justified his tariffs as a crackdown on illegal migration and fentanyl trafficking. However, he signaled a willingness to talk, saying he planned to call Chinese President Xi Jinping within 24 hours.
Meanwhile, Trump struck last-minute border security deals with Canada and Mexico, pausing planned tariffs on their goods for 30 days pending further negotiations. Mexican President Claudia Sheinbaum agreed to deploy 10,000 troops to the US border, while Canadian Prime Minister Justin Trudeau pledged to strengthen border security and designate drug cartels as “terrorist” organizations.
Trump’s aggressive trade policies have fueled tensions with US allies. Canada responded by banning American firms from bidding on government contracts and scrapping a deal with Elon Musk’s Starlink. Protests against US policies are becoming widespread, with Canadians boycotting American goods and booing the US national anthem at sporting events.
Despite Trump’s claims that Canada is a security threat, US government data as well as other reliable statistics demonstrate that drug inflow from the northern border is minimal. Still, Trump keeps reiterating his unrealistic calls for Canada to become the “51st state,” further straining relations.