China said Tuesday it would counter President Trump’s tariffs on Chinese products with tariffs of its own on multiple U.S. imports. It also announced an antitrust investigation into Google and other trade measures aimed at the U.S., ratcheting up trade tensions between the two economic heavyweights.
U.S. tariffs on products from Canada and Mexico were also set to go into effect Tuesday but Mr. Trump paused his plans to implement them for at least a month after talks with the leaders of both countries, who vowed to step up efforts to combat the flow of drugs and migrants across their borders with the U.S. He planned to talk with Chinese President Xi Jinping in the next few days.
China said Tuesday it would implement a 15% tariff on coal and liquefied natural gas products as well as a 10% tariff on crude oil, agricultural machinery and large-engine cars imported from the U.S. The tariffs would take effect next Monday.
“The U.S.’s unilateral tariff increase seriously violates the rules of the World Trade Organization,” the statement from a Ministry of Finance office said. “It is not only unhelpful in solving its own problems but also damages normal economic and trade cooperation between China and the U.S.”
Beijing said it would file a complaint with the WTO over the “malicious” levies, Agence France-Presse reports.
China is the world’s largest importer of liquefied natural gas (LNG), with its top suppliers being Australia, Qatar, and Malaysia. The U.S., which is the biggest exporter of LNG globally, does not significantly export LNG to China.
In addition, China’s State Administration for Market Regulation said Tuesday it is investigating Google on suspicion of violating antitrust laws. The announcement didn’t mention the tariffs but came just minutes after Mr. Trump’s 10% tariffs on China were to take effect.
It’s unclear how the probe will affect Google’s operations. Google has a limited presence in China, and its search engine is blocked in the country like most other Western platforms. Google exited the Chinese market in 2010 after refusing to comply with censorship requests from the Chinese government and following a series of cyberattacks on the company.
Google didn’t immediately comment.
Mr. Trump paused his plans Monday to implement steep tariffs on imports from Mexico and Canada for at least a month after talks with the leaders of both countries, who vowed to step up efforts to combat the flow of drugs and migrants across their borders with the U.S. He planned to talk with Chinese President Xi Jinping in the next few days.
In addition to the tariffs and Google probe, China announced export controls on several elements critical to the production of modern high-tech products. They include tungsten, tellurium, bismuth, molybdenum, and indium, many of which are designated as critical minerals by the U.S. Geological Survey, meaning they’re essential to U.S. economic or national security and have supply chains vulnerable to disruption.
The export controls are in addition to ones China placed in December on key elements such as gallium, which is used in manufacturing.
The Commerce Ministry also placed two American companies on an “unreliable entities” list: PVH Group, which owns Calvin Klein and Tommy Hilfiger, and Illumina, a biotechnology company with offices in China. The listing bars them from engaging in China-related import or export activities and from making new investments in the country.
Beijing began investigating PVH Group in September last year over “improper Xinjiang-related behavior” after the company allegedly boycotted the use of Xinjiang cotton.
Possible ramifications
Analysts said China’s retaliatory measures would not only cause adverse effects on the U.S. economy but would impact the rest of the world.
This isn’t the first round of tit-for-tat actions between the two countries. China and the U.S. engaged in a trade war in 2018 when Trump raised tariffs on Chinese goods and China responded in kind.
This time, analysts said, China is much better prepared to counter.
“They have a much more developed export control regime. We depend on them for a lot of critical minerals: gallium, germanium, graphite, a host of others. So … they could put some significant harm on our economy,” said Philip Luck, a former State Department official and director at the Center for Strategic and International Studies on Monday at a forum.
The response from China appears calculated and measured, said Stephen Dover, chief market strategist and head of the Franklin Templeton Institute.
“I don’t think they want the trade war escalating,” he said. “And they see (the) example from Canada and Mexico and probably they are hoping for the same thing.”
But, he adds, “A risk is that this is the beginning of a tit-for-tat trade war, which could result in lower GDP growth everywhere, higher U.S. inflation, a stronger dollar, and upside pressure on U.S. interest rates,” Dover said.
