In tit-for-tat to US President Donald Trump‘s tariff threats, China on Tuesday announced to impose a 15 per cent tariff on coal and liquefied natural gas from the United States. Beijing’s commerce ministry also imposed a 10 per cent tariff on crude oil, agricultural machinery and large-displacement cars. This came after Washington slapped ten per cent levies on Chinese goods.
Beijing’s commerce ministry said Trump’s tariff move “seriously violates World Trade Organization rules”. “It is not only unhelpful in solving its own problems, but also damages normal economic and trade cooperation between China and the US,” the statement added.
According to a report from AP, the tariffs imposed by China will come into force next Monday.
Meanwhile, Trump is expected to hold a talk with Chinese President Xi Jinping in the next few days.
China to investigate Google
Also, China will investigate Google on suspicion of violating antitrust laws. The country’s state administration for market regulation announced on Tuesday minutes before the US president’s 10% tariffs were to take effect.
Tensions with Canada and Mexico
Even as China retaliated, Trump engaged in last-minute negotiations with Mexican President Claudia Sheinbaum and Canadian Prime Minister Justin Trudeau to avert a full-blown trade conflict with America’s two largest trading partners. Both leaders agreed to tighten border controls to curb migrant flows and fentanyl trafficking in exchange for a 30-day pause on tariffs.
Market optimism briefly surged on Tuesday following the tariff pause on Mexico and Canada, but traders later scaled back gains as China proceeded with its countermeasures. Global stock markets had already suffered on Monday amid fears of a widening trade war.
Trump, in his statements, insisted that these were not trade measures but rather part of his administration’s war on drugs. “This is not a trade war, this is a drug war,” National economic council director Kevin Hassett told CNBC, accusing Canada of misunderstanding Washington’s intentions. However, US government data suggests that the bulk of fentanyl trafficking occurs via maritime routes rather than across the Canadian border.
Political fallout in Canada
The tariff threats triggered a strong backlash in Canada, where anti-US sentiment has grown. Canadian consumers have begun boycotting American products, while the Ontario government has banned US companies from bidding on billions of dollars worth of contracts. The province also terminated a deal with Tesla CEO Elon Musk’s Starlink project.
In a dramatic political twist, the tariff pressure led to a crisis within the Canadian government, forcing Trudeau to announce his resignation. Canada is now heading for early elections as soon as April.
Trump further inflamed tensions by reviving his controversial suggestion that Canada should become the 51st US state. The remark, widely dismissed in Canada, has fueled nationalist sentiments ahead of the upcoming election.
Trump’s tariff strategy: A second-term push
The US president remains steadfast in his tariff-heavy economic policy, which has become even more aggressive in his second term. Trump has repeatedly claimed that the economic burden of tariffs will fall on foreign exporters rather than US consumers, a position disputed by most economic experts.
However, in a rare acknowledgement of potential downsides, the 78-year-old president conceded upon his return from Florida that Americans might feel some economic “pain” as a result of the trade measures.
With tensions escalating on multiple fronts, all eyes are now on an expected phone call between Trump and Chinese President Xi Jinping, which could determine the next phase of the US-China trade war.