China retaliated immediately to the 10% U.S. tariff on all Chinese goods by announcing its own levies of 10% to 15% on some U.S. products. The Chinese government stated that starting on February 10, there would be additional tariffs of 15% on coal and liquefied natural gas, and 10% on crude oil, agricultural machinery, large-displacement automobiles, and pickup trucks. This response came right after the U.S. tariff took effect, as President Trump paused tariffs on goods from Canada and Mexico.
The failed attempt to avoid tit-for-tat tariffs with China increases the risk of a trade war between the two largest economies in the world. Beijing criticized the U.S. tariff as a violation of World Trade Organization rules and unhelpful in solving problems.
In addition to tariffs, China announced an investigation into Google for anti-trust violations and imposed export controls on rare earth elements. Illumina and PVH Corp. were added to the “unreliable entity list” limiting their operations in China.
Despite the paused tariffs with Canada and Mexico, no agreement has been reached with China. President Trump is expected to speak with Chinese President Xi Jinping in the near future.
China has referred the U.S. tariff measures to the World Trade Organization, claiming they violate WTO rules and are acts of unilateralism and trade protectionism. The U.S. has hindered the WTO’s ability to mediate trade disputes, but China may use legal action to rally international support against the tariffs.
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