China Responds to Trump's Tariffs with Aggressive Countermeasures
On February 4, 2025, China launched a series of retaliatory measures against the United States after President Donald Trump’s administration enacted additional tariffs on Chinese imports. This swift response has escalated the trade tensions between the world’s two largest economies, setting the stage for what experts are calling the "early stages" of a renewed trade war.
US Tariffs and China's Immediate Counteractions
The tension began when the U.S. imposed a new 10% tariff on all Chinese imports starting at 12:01 am ET on Tuesday, February 4, 2025. The tariff was part of Trump’s ongoing efforts to address what he claims is China’s inadequate action against the flow of illicit drugs, specifically fentanyl, into the U.S. In retaliation, China’s Finance Ministry swiftly announced its own measures.
By February 10, China will impose 15% tariffs on U.S. coal and liquefied natural gas (LNG) exports. Additionally, a 10% tariff will apply to crude oil, farm equipment, and certain automobiles from the U.S. This move is expected to significantly impact U.S. industries and agriculture, as China is one of the largest consumers of American raw materials and goods.
WTO Complaint and Antitrust Investigation
In a move to safeguard its economic interests, China filed a formal complaint with the World Trade Organization (WTO) against the U.S. for its tariff actions. The Chinese government emphasized that these tariffs were unjust and malicious, describing them as a violation of international trade agreements. The filing marks a significant escalation in trade tensions, with China seeking to protect its "legitimate rights and interests."
Alongside the WTO complaint, China also launched an antitrust investigation into Alphabet Inc.’s Google. This investigation targets Google’s suspected violations of China’s anti-monopoly laws. Although Google’s services, such as its search engine, are blocked in China, the company maintains a significant presence through local partnerships, particularly with advertisers.
Retaliatory Measures Against U.S. Firms
Further intensifying its response, China added two U.S. companies to its unreliable entity list: PVH Corp, the parent company of brands such as Calvin Klein, and Illumina, a biotechnology firm. The Chinese government accused these companies of taking discriminatory actions against Chinese businesses, which it claims damaged Chinese enterprises' legitimate rights.
Additionally, China’s State Administration of Market Regulation accused Google of engaging in monopolistic practices and launched an official investigation. Although specific details of the probe remain unclear, the move marks a critical step in China’s increasing scrutiny of foreign firms operating within its borders.
Export Controls on Critical Rare Earths
In another retaliatory action, China announced that it would impose export controls on several rare earth minerals, including tungsten, tellurium, molybdenum, bismuth, and indium. These materials are critical to the production of electronics, renewable energy technologies, and military equipment. China is the world’s largest producer of rare earths, and these export controls could disrupt global supply chains, especially for countries dependent on these materials for clean energy and high-tech manufacturing.
This move comes on the heels of export restrictions China imposed in December 2024 on gallium and other critical materials used in semiconductor manufacturing. By tightening control over rare earth exports, China is seeking to leverage its dominant position in the global market to put additional pressure on the U.S. and its allies.
The Bigger Picture: A Renewed Trade War
The recent actions have reignited fears of a full-blown trade war. Under Trump’s first term, the U.S. and China engaged in a bitter trade conflict that lasted for nearly two years, resulting in hundreds of billions of dollars worth of tariffs on both sides. The previous round of tariffs disrupted global supply chains, hurt economies, and created lasting uncertainty in international trade.
This time around, Trump's administration is focusing on China's handling of fentanyl exports, with Trump warning that tariffs could increase if China fails to curb the flow of the deadly opioid into the U.S. Despite China’s assertion that fentanyl is an American issue, Trump has repeatedly used it as a key justification for his economic policies, with dire implications for the broader trade relationship.
The Road Ahead
The renewed trade conflict could have significant global repercussions, particularly for supply chains and manufacturing industries. Analysts at Oxford Economics have already downgraded their economic growth forecasts for China, citing the likelihood of additional tariffs and the long-term impact of the trade war on economic stability.
As tensions between the U.S. and China continue to rise, the potential for further escalation remains high. With both sides taking a hard stance, the next few months could be critical in determining the future trajectory of U.S.-China relations and global economic dynamics.
