China is to impose tariffs on a swath of US imports and has opened an antitrust probe into Google as it retaliates against Donald Trump’s imposition of an additional 10 per cent tariff on its exports.
China unveiled additional tariffs of between 10 and 15 per cent on US liquefied natural gas, coal, crude oil and farm equipment, which it said would take effect on February 10. Beijing also said it would impose tariffs on some car exports from the US and announced additional export controls on rare metals.
The measures were announced as Trump’s new levies on China, which the US president had described as an “opening salvo” in his renewed trade offensive, came into effect after midnight on Tuesday in Washington.
Trump is expected to speak to China’s President Xi Jinping in the coming days, prompting hopes that the two leaders will be able to hammer out a deal to avert a full-blown trade war between the world’s two largest economies.
Hong Kong’s Hang Seng index, which had risen as much as 3.3 per cent in early trading, shed some of its gains to close up 2.7 per cent, while the offshore renminbi strengthened slightly to Rmb7.32 and oil prices edged down about 1 per cent.
China’s initial retaliation was a “more symbolic move for now”, said analysts at Oxford Economics. They said Beijing’s move amounted to an increase in the overall weighted effective tariff rate of 2 percentage points on US imports.
“The trade war clearly [is] in the early stages,” Louise Loo, China lead economist at Oxford Economics, wrote in a note.
Trump had unnerved allies and investors with a weekend announcement of levies on Canada, Mexico and China, which he accused of failing to curb immigration and the flow of the deadly opioid fentanyl and its precursors into the US.
But the tariffs against Canada and Mexico were delayed a month following last-minute talks on Monday between Trump and Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum.
China’s finance ministry said the US tariffs violated World Trade Organization rules. “It is not only unhelpful in solving its own problems, but also undermines the normal economic and trade co-operation between China and the US,” it said as it announced the new tariffs.
The ministry said US coal and LNG exports would face an additional 15 per cent tariff, while crude oil, agricultural machinery, cars and pick-ups would receive a 10 per cent tariff.
China was the second-largest buyer of US coal in the first three quarters of 2024, accounting for 10.9 per cent of total coal exports and trailing only India, according to data from the US Energy Information Administration.
The country accounted for 2.9 per cent of US natural gas exports from January to November 2024, according to EIA figures.
The White House did not respond to a request for comment.
China’s antitrust regulator on Tuesday also announced an investigation into Google for suspected violations of anti-monopoly laws.
While the search engine is blocked in China — along with most of parent company Alphabet’s businesses — the US group profits from Chinese businesses advertising abroad.
Chinese phonemakers also widely use its Android operating system, a long-standing point of frustration for Chinese officials, who chafe at American control of the software underpinning most smartphones.
During the first Trump administration, Washington blocked Huawei from Google’s software ecosystem, damaging sales of the Chinese national champion’s smartphone sales outside its home market.
China’s commerce ministry on Tuesday also announced export controls on tungsten and more than two dozen other rare metal products and technologies, effective immediately.
It additionally placed US biotech group Illumina and PVH Group, an American clothing maker whose brands include Calvin Klein and Tommy Hilfiger, on China’s “unreliable entity list”, a national security blacklist.
The ministry had previously investigated PVH for alleged discrimination against cotton from Xinjiang, the western region where Chinese authorities are accused of human rights abuses including forced labour.
There was some optimism for an agreement in the coming days to ease trade tensions. Chris Beddor, deputy China research director at Gavekal, said the Chinese move was “not an escalatory response”.
“They’re clearly aiming for negotiations and a deal,” he said. The antitrust probe into Google was intended as another bargaining chip, similar to China’s probe into US chipmaker Nvidia.
But some economists expressed doubts that either side had much room for manoeuvre.
“The likelihood of [an] agreement to avoid tariffs appears limited,” said Robin Xing, chief China economist at Morgan Stanley. “Paths to de-escalation . . . remain narrow and would require significant compromises from both sides.”
Additional reporting by Demetri Sevastopulo in Washington and Zijing Wu in Hong Kong