China Retaliates with Tariffs and Trade Restrictions as U.S. Duties Take Effect

China swiftly responded to new U.S. tariffs, escalating tensions between the world’s two largest economies, even as President Donald Trump temporarily spared Canada and Mexico.

Key Developments:

U.S. Tariffs Take Effect:

• A 10% tariff on all Chinese imports to the U.S. started at 12:01 a.m. ET Tuesday.
• Trump justified the move by citing China’s failure to curb illicit drug flows into the U.S.

China’s Retaliation:

• Tariffs on U.S. exports starting Feb. 10:
  • 15% on coal & LNG
  • 10% on crude oil, farm equipment, large-engine sedans & electric trucks
  • Potential impact on Tesla’s Cybertruck
• Tech & Trade Restrictions:
  • Alphabet’s Google faces an anti-monopoly probe
  • PVH Corp (Calvin Klein) & biotech firm Illumina added to China’s sanctions list
  • Export controls on rare earth metals vital for electronics, defense, and solar industries

China’s Measured Approach

While the U.S. imposed a broad tax on imports, China’s countermeasures are more targeted.

• Beijing seeks to keep negotiations open, giving both sides time to reach a deal before Feb. 10.
• Trump & Xi Jinping plan to speak later this week, signaling possible diplomatic efforts.

Market & Economic Implications

Energy & Auto Sectors Hit:

• U.S. crude oil, LNG, and EV exports face higher costs in China.
• Tesla’s expansion in China could be affected.

Tech Under Pressure:

• Google faces regulatory scrutiny in China.
• Rare earth restrictions could disrupt U.S. semiconductor & military industries.

Trade Talks in Focus:

• China’s delayed tariffs signal room for negotiations.
• Markets await Trump’s next move amid rising economic risks.

Looking Ahead

The trade war’s next phase depends on:
Trump-Xi call & potential tariff reversals
China’s next steps if talks fail
Market & business reactions to new restrictions