China Responds to US Tariffs with Its Own Measures, Risking Renewed Trade Tensions

In a swift reaction to the 10 percent tariffs on Chinese imports implemented by the United States, China's finance ministry revealed a new package of tariffs targeting several US goods. Effective from February 10, the imposed tariffs include 10 percent on crude oil, large vehicles, and farming equipment, while US coal and liquefied natural gas (LNG) face a 15 percent tax.

This development follows the introduction of US tariffs that may reignite tensions in the ongoing trade battle between the economic superpowers, driven by President Trump's dissatisfaction with China's control over the flow of illegal drugs into the United States. Beijing’s commerce authority criticized these tariffs as contraventions of World Trade Organization regulations.

While Trump had recently postponed threats of increased tariffs on Canada and Mexico, he did not extend any similar leniency towards China, as new tariffs took effect early on Tuesday morning. The White House indicated that President Trump would only speak with Chinese President Xi Jinping later in the week, suggesting a delay in diplomatic discussions.

Historically, Trump instigated a significant trade conflict with China during his first term due to concerns over the US trade deficit. Although a temporary resolution was sought in 2020, with China agreeing to purchase more American products, the COVID-19 pandemic disrupted this plan and widened the trade deficit to $361 billion.

Economic analysts predict that if the trade war continues to escalate, further tariffs may be on the horizon. Trump reiterated that he may raise tariffs unless China takes action to halt the export of fentanyl. China has rebutted these claims, asserting that fentanyl is an American issue, while hinting at the possibility of defending its position through WTO channels and other counteractions.

In the realm of trade, it is noteworthy that crude oil constitutes a minor portion of China's imports from the US, as does LNG, indicating the limited impact but high stakes of these tariff battles. Markets reacted strongly to the news, with crude prices falling, and key currencies such as the yuan depreciating.

Experts express skepticism about reaching a resolution between the two nations, pointing out the complexities that arise from economic and diplomatic demands. Alongside the tariffs, China initiated an investigation into US tech company Google, expanded its “unreliable entities” list to include notable American firms, and imposed new export regulations on crucial rare metals and chemicals essential for various industries.