The President of the United States Donald Trump announced tariffs on China, Canada, and Mexico over the weekend. Canadian and Mexican counterparts hit back with their levies on U.S. goods.
Tuesday, February 2, 2025, China slapped tariffs on some U.S. imports in a swift response to new U.S. duties on Chinese goods. It’s renewing the war between top economies. This was the result of countermeasures as President Donald Trump offered reprieves to Mexico and Canada.
An additional 10% tariff on all Chinese imports from U.s came into effect on Tuesday. This happened after Trump repeatedly warned Beijing that it was not doing enough to cut off the flow of illegal drugs to the United States.
The Chinese Ministry of Finance announced that they will implement a 15% tariff on imports of coal and liquefied natural gas from the United States. They will also implement tariffs on United States imports of crude oil, agricultural machinery, large-engine vehicles, and trucks. These new tariffs will take effect on 10 February 2025.
The Chinese government declared that these measures are a direct response to the “unilateral tariff increase” implemented by the United States. “They claim it’s a serious
Breach of World Trade Organization regulations and failure to address the issues. It disrupts the economic and trade relations between China and the U.S.”
This decision marks a continuity of protective trade polices initiated by the Trump administration. In 2018, trump implemented a tariff of $300 billion on Chinese goods. That was criticized as a poor economic policy. The President Biden back then do not only maintained the tariffs but also expended them.
Broader Economic Actions
China has taken additional steps beyond the tariffs. These steps can further strain the relationships between China and the U.S.
- They have announced the Anti-monopoly examination to Google. Chinese regulatory body has also disclosed the investigation into the tech giant.
- They have also limited the export of rare metals that are crucial for tech industries. The limited materials include tungsten, indium, and molybdenum.
- They have declared an unreliable list of entities which include two American companies
- PVH Group (owner of Tommy Hilfiger and Calvin Klein) and Illumina, Inc., have been added to this list, citing violations of market principles.
The primary motivation for the current trade dispute was to pressure Beijing into addressing the flow of fentanyl into the United States. The fabricated crises have concerning alarms. Fentanyl is the leading cause of death for Americans aged 18 to 45.
This economic trade war is putting severe consequences on the global economy. Financial markets are reviving from the volatility as investors. These new tariffs are putting impact on international trade flows as well as supply chains.
Future Outlook
With the rising tensions among countries, there can be room for diplomatic engagement. White House has indicated that President Trump is
expected to speak with Chinese President Xi Jinping in the coming days. This discussion can be crucial in knowing the further escalation can be avoided or if there can be a resolution.
China has shown its opposition to U.S. tariffs and declared its intention to challenge them at the World Trade Organization. The Chinese government has expressed its preference for resolving the disagreement through dialogue.
The spokesperson stated, “There is no winner in trade or tariff war, which aims to harm the interest of both sides and the world”.
With the start of February, the global community watches closely for applied tariffs and their impact not only on the U.S. and China but also on the broader international economic outlook.
The situation remains fluid till further negotiation or escalation in the coming days. This trade dispute can have significant impacts on trade patterns, supply chains, and greater economic tension in the years to come.
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