China’s Retaliatory Tariffs Against the U.S. Escalate Tensions: A Strong Clash Between the Two Economies

China responds to U.S. tariff hikes with comprehensive countermeasures, signaling a deepening trade conflict

In response to the U.S. government's recent decision to impose a new round of tariffs, China has announced retaliatory measures, heightening tensions between the two nations. The trade war between China and the U.S. shows no signs of de-escalation, with both governments adopting hardline stances. Starting from February 10, China will implement additional tariffs on 80 American products, ranging from 10% to 15%. This move follows U.S. President Donald Trump’s decision to impose a 10% tariff on Chinese goods, and it signals the continuation of a fierce economic confrontation that risks intensifying in the coming months.

Retaliatory Tariffs: A Strong Response to U.S. Economic Actions

The Chinese government’s response includes a wide array of measures aimed at countering the impact of U.S. tariffs. China has targeted key industries with new tariffs: 15% on coal, alloys, and liquefied natural gas (LNG), and 10% on 72 other items, including crude oil, agricultural machinery, large displacement vehicles (over 4,000cc), and pickup trucks. These tariffs are designed to create significant economic pressure on U.S. exports to China, which could impact both trade flows and market dynamics.

In addition to tariff increases, China has implemented stricter controls on exports of essential minerals, including tungsten, tellurium, bismuth, molybdenum, and indium. These minerals are vital for various industries, including technology and defense, and their export control is seen as a strategic response to U.S. actions. As part of the new measures, Chinese authorities have mandated that exports of these items will require additional scrutiny and approval for dual-use items, which can be applied for military purposes.

U.S.-China Trade Talks Stall as Both Sides Dig in Their Heels

The once-hopeful prospect of improved U.S.-China relations under the leadership of President Trump and Chinese President Xi Jinping has quickly soured. Despite initial hopes for a diplomatic breakthrough following some conciliatory rhetoric from both sides, the imposition of the U.S. tariffs has led to a sharp deterioration in relations. President Trump signed an executive order on February 4, imposing the controversial 10% tariffs on a range of Chinese goods, deepening the rift between the two countries.

The immediate fallout from the tariff hikes includes not only increased costs for businesses and consumers but also a broader sense of uncertainty in global trade markets. As part of the trade conflict, China has also criticized the U.S. move as a violation of World Trade Organization (WTO) rules and has vowed to seek redress. However, rather than retreating, China has doubled down, imposing counter-tariffs in a strategic show of strength. Both countries appear committed to their economic positions, setting the stage for a prolonged conflict.

Expanding Corporate Sanctions and Investigations into Tech Giants

Beyond tariff increases, China is also broadening its regulatory actions against American businesses. The Chinese Ministry of Commerce has added several companies to its "unreliable entity" list, a blacklist that includes companies such as PVH Group, which owns brands like Calvin Klein and Tommy Hilfiger, and Illumina, a life sciences company. Being placed on this list exposes companies to severe penalties, including fines, bans on trade activities, and restrictions on employee movements.

In addition to these measures, the Chinese government has launched an antitrust investigation into Google, accusing the tech giant of violating Chinese competition laws. Bloomberg has also reported that Apple’s App Store policies may come under scrutiny, as China increases its regulatory pressure on foreign tech firms. If sanctions or investigations target major companies like Apple, the impact on their bottom line, especially in China—a key market for both Google and Apple—could be devastating.

The Continued Toll of the U.S.-China Trade War

The intensification of tariffs and corporate sanctions marks a new chapter in the U.S.-China trade war. Despite brief moments of hope for negotiation, both sides are now entrenched in their positions, with little indication of a breakthrough on the horizon. The political landscape has shifted significantly, with U.S. trade policy toward China remaining confrontational under President Trump’s administration.

Experts believe that this trade conflict could have a lasting impact on global markets. Li Xiaojin, a researcher at Zhao Yin Securities in China, warned that while the current 10% tariffs are lower than the 60% originally planned by the Trump administration, there is still significant pressure on the market for further escalation. The issue of manufacturing reshoring, the ongoing TikTok controversy, and broader geopolitical shifts, including the BRICS countries' move away from the U.S. dollar, are all factors that could trigger even higher tariffs in the future.

China's Strategic Shift: Focus on Domestic Economic Resilience

Amid the rising tensions, many analysts are closely monitoring China’s long-term response. Some suggest that China’s government will take significant steps to buffer its economy from the effects of U.S. tariffs. According to an official from the Bank of Korea’s Beijing office, while Trump’s second-term policies could negatively affect China’s economy, the Chinese government is likely to respond with measures designed to minimize the impact, including accelerating efforts to shift towards a more domestically-focused economic model. This could involve bolstering the service sector and increasing reliance on internal consumption to offset the pressures from international trade.

The continuation of the tariff battle between China and the U.S. underscores the broader geopolitical struggle that is reshaping global trade dynamics. With no immediate resolution in sight, the conflict promises to be a defining feature of international trade relations in the years to come, as both superpowers seek to assert their dominance on the world stage.