US President Donald Trump on Saturday announced sweeping measures against major trade partners Canada and Mexico, with goods from China hit with an additional 10 percent tariff on top of the duties they already endure.
Minutes after they came into effect, Beijing unveiled levies of 15 percent on imports of coal and liquefied natural gas from the United States, while crude oil, agricultural machinery, big-engined vehicles, and pickup trucks face 10 percent duties.
China is a major market for US energy exports and according to Beijing customs data, imports of oil, coal and LNG totalled more than $7 billion last year.
But that is dwarfed by China's imports from more friendly powers such as Russia, from which it purchased $94 billion-worth last year.
Beijing said the measures were in response to the "unilateral tariff hike" by Washington.
The US decision, China said, "seriously violates World Trade Organization rules, does nothing to resolve its own problems, and disrupts normal economic and trade cooperation between China and the United States".
With that in mind, Beijing said it would file a complaint with the WTO over the "malicious" levies.
Alongside its tariffs, China announced a probe into US tech giant Google and the addition of US fashion group PVH Corp. -- which owns Tommy Hilfiger and Calvin Klein -- and biotech giant Illumina to a list of "unreliable entities".
Beijing also unveiled fresh export controls on rare metals and chemicals including tungsten, tellurium, bismuth, and molybdenum, used in a range of industrial appliances.
"I think the retaliation is not aggressive, as China only targets some US products, in response to the US tariff on all China's exports to the US," Zhang Zhiwei of Pinpoint Asset Management said in a note.
"This is likely only the beginning of a long process for the two countries to negotiate"
- Canada, Mexico deals -
Trump has said his tariffs aimed to punish countries for failing to halt flows of illegal migrants and drugs including fentanyl into the United States.
But he said Monday that he planned a call with Chinese counterpart Xi Jinping in the next 24 hours.
Mexican President Claudia Sheinbaum and Canadian Prime Minister Justin Trudeau had both earlier struck last-minute deals with Trump to tighten border measures against the flow of migrants and fentanyl into the United States, leading to a 30-day pause on threatened tariffs.
Asian equities spiked Tuesday on news of the paused tariffs, and hopes that similar negotiations could relieve the levies against the world's number-two economy provided extra optimism.
However, traders pared some of those gains as China unveiled its measures.
Markets had slumped Monday as Trump's threat of sweeping levies on imports from Canada and Mexico sparked fears of a global trade war.
The president said that after "very friendly" talks with Sheinbaum he would "immediately pause" the tariffs on Mexico, and that his counterpart had agreed to send 10,000 troops to the US-Mexico frontier.
- 'Not a trade war' -
Tensions appeared higher between the United States and Canada -- but after two calls with Trudeau, Trump said on Truth Social that the prime minister had "agreed to ensure we have a secure Northern Border, and to finally end the deadly scourge of drugs like Fentanyl".
Trudeau said Canada would deploy nearly 10,000 frontline officers to help secure the border, list drug cartels as terrorists, appoint a "Fentanyl Czar" and crack down on money laundering.
It was not clear the real extent of the changes on the Canadian border, given that authorities said in December they already had 8,500 personnel deployed.
Canada, China and Mexico are the United States's three biggest trading partners.
The White House said earlier there had been a "heck of a lot of talks" over the weekend.
"This is not a trade war, this is a drug war," National Economic Council Director Kevin Hassett told CNBC, complaining that "the Canadians appeared to have misunderstood the plain language".
However, US government figures show that only a minimal quantity of drugs enter via Canada.
- 51st state? -
Ottawa had vowed to respond strongly to the tariffs.
Canadians have booed the US national anthem at sporting events, cancelled holidays in the United States and boycotted American products.
Its most populous province Ontario on Monday banned US firms from bidding on tens of billions of dollars in government contracts -- and dumped a deal with Trump ally Elon Musk's Starlink.
Trump has upped the pressure recently by calling Canada's existence into question -- once again advocating on Monday for it to become the 51st US state.
A political crisis in the Canadian government over Trump's tariff threats led to Trudeau announcing last month that he would resign. Canadians now face elections as early as April.
Mexico has meanwhile been under heavy pressure to secure its border with the United States as Trump vows a massive crackdown on undocumented migrants.
Ordinary Chinese stoic in the face of escalating US trade war
Shanghai (AFP) Feb 4, 2025 -
After China announced retaliatory tariffs against the United States, walkers along Shanghai's waterfront were stoic Tuesday in face of both the cold and the prospect of an escalating trade war.
The tariffs on US energy, vehicles and equipment were unveiled minutes after additional levies on Chinese goods announced Saturday by US President Donald Trump came into effect.
Tariffs on a wider range of goods were announced by Chinese authorities on Tuesday.
Trump's move was the latest in a trade confrontation between the global superpowers that started eight years ago, in his first term.
Out for a stroll on the last day of China's Lunar New Year holiday, many who talked to AFP seemed largely unfazed by the news.
"Now with the regular trade war, such as the restrictions on semiconductors, I think it is good (for China)," said a 48-year-old man surnamed Nian.
"We will be autonomous -- we will be better," he said, using the example of Chinese AI firm DeepSeek, which made headlines recently with a chatbot which can match its American competitors seemingly at a fraction of the cost.
US export controls on high-tech chips may have inadvertently fuelled its success, analysts have said, spurring the firm to develop clever ways to overcome them.
Nian said that the Chinese economy could weather the stormy relationship with Washington.
- 'Lives basically unaffected' -
"People's lives are basically unaffected, and the domestic demand of so many people (in China) is completely enough," he said.
The government has been trying to boost domestic consumption, which has remained stubbornly sluggish post-Covid, dragging on growth.
Staring across the similarly slow-moving grey waters of the Huangpu river, 36-year-old Zhou said he thought most Chinese were nevertheless "relatively confident" about the economy long-term.
But "when there is this type of trade war... the most fundamental harm is actually to the interests of normal people", he warned, gesturing to his iPhone as an example of a product he said could be affected eventually.
He said he harboured no ill will towards Trump, seeing the confrontation between the world's two largest economies as "healthy competition".
"The leaders of every country are just defending their own interests," he told AFP.
Sitting beside her livestreaming equipment on a bench, 42-year-old Karen Zhang said she was concerned tariffs would have an impact on life for those living in China's big international cities.
However, she said Beijing was right to retaliate.
"I think overall this is definitely not a good thing, but China also has no choice," she said.
"The United States has been carrying out some very severe measures and policies against China. So China has to fight back... we can't let them casually bully us," she said.
Her view was echoed by Nian.
"I think we should take countermeasures," he said. "We should be a bit more ruthless."
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