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China escalated its trade dispute with the United States on Tuesday by imposing a series of targeted measures against U.S. companies, including Google (NASDAQ:GOOGL), PVH Corp (NYSE:PVH), and major farm equipment manufacturers. The move came minutes after Washington’s new tariffs on Chinese goods took effect, further intensifying tensions between the world’s two largest economies.
Beijing’s Measures: Tech, Fashion, and Heavy Industry in the Crosshairs
China’s State Administration for Market Regulation announced that Google is under investigation for alleged anti-monopoly violations. While specific details were not disclosed, the inquiry signals heightened regulatory scrutiny on U.S. technology firms operating in China.
Despite being blocked in China, Google’s advertising business and partnerships with Chinese firms generate a small percentage of its global revenue. Previously, Google had attempted to establish a small artificial intelligence research center in China in 2017, but the project was dismantled by 2019.
Meanwhile, China’s Commerce Ministry placed PVH Corp, the parent company of Calvin Klein and Tommy Hilfiger, and U.S. biotech giant Illumina (NASDAQ:ILMN) on its “unreliable entity” list. The companies were accused of implementing “discriminatory measures” against Chinese businesses, allegedly damaging their rights and interests.
Being added to this blacklist could expose these firms to financial penalties, restrictions on trade, and even revocation of work permits for foreign employees. PVH had already been under regulatory scrutiny in China over issues linked to its operations in Xinjiang.
Tariffs on U.S. Farm Equipment and Autos
In a further retaliatory step, China imposed 10% tariffs on U.S. farm equipment, targeting companies such as:
- Caterpillar (NYSE:CAT)
- Deere & Co (NYSE:DE)
- AGCO Corp
Additionally, tariffs were extended to certain trucks and luxury sedans imported from the U.S., potentially affecting Tesla’s (NASDAQ:TSLA) Cybertruck, which has been awaiting regulatory approval for sale in China.
Tesla’s Cybertruck had previously been designated as a “passenger car” by China’s Ministry of Industry and Information Technology in December, but the classification was later removed. This suggests uncertainty over its regulatory clearance, adding another layer of complexity to Tesla’s operations in China.
Market Implications and Economic Outlook
The latest developments mark a significant escalation in U.S.-China trade tensions, raising concerns over the global economic outlook and the business climate for multinational firms. Investors will closely monitor whether diplomatic negotiations can ease tensions or if further tit-for-tat measures will impact equity markets, supply chains, and corporate earnings.
With both economies adopting increasingly aggressive trade policies, market volatility is expected to remain elevated, particularly in technology, industrials, and consumer goods sectors that have direct exposure to the ongoing dispute.
