WASHINGTON/BEIJING, Feb 4 – In response to newly imposed U.S. trade tariffs, China implemented selective duties on American imports on Tuesday while also signaling potential sanctions against several major companies, including Google. This measured reaction comes as President Donald Trump introduced extensive levies on Chinese goods.
Despite the escalating tensions, market sentiment saw a boost as news emerged that Trump was set to engage in a conversation with Chinese President Xi Jinping later in the day. Investors speculated that the discussion could lead to a temporary easing of trade tensions, similar to the reprieve granted to Mexico and Canada the day before. Stocks and oil prices saw a positive uptick following the announcement.
Trump’s trade advisor, Peter Navarro, speaking at an event, remarked, “Let’s see what happens with the call today,” while White House press secretary Karoline Leavitt confirmed that the leaders of the two largest global economies were scheduled to connect “very soon.” However, no precise timing for the conversation was disclosed.
China’s Limited Response Amid Growing Trade Tensions
China’s reaction to the 10% tariff imposed on all of its exports to the U.S. appeared calculated, suggesting that Beijing sought to keep negotiations open rather than escalate into a full-blown trade war. Analysts from Capital Economics estimated that the newly introduced Chinese tariffs would affect approximately $20 billion worth of U.S. imports— a significantly smaller scale in comparison to the $450 billion in Chinese goods subjected to U.S. levies.
Julian Evans-Pritchard, an expert in Chinese economic policies, stated, “The measures are relatively restrained, particularly when compared to Washington’s actions, and appear designed to send a political message rather than inflict maximum damage.”
Meanwhile, Trump announced a suspension of a proposed 25% tariff on goods from Mexico and Canada for 30 days. This decision followed discussions where the two neighboring countries agreed to cooperate with the U.S. on border security and crime prevention.
Potential Trade Disputes with Europe
Beyond China, Trump hinted that the European Union could be next in line for tariff impositions, though no specific timeline was provided. European Commission President Ursula von der Leyen addressed the situation, emphasizing the EU’s commitment to maintaining strong trade relations with the U.S.
“We aim to be open and practical in how we approach negotiations, but our interests will always be safeguarded—whenever and however necessary,” she asserted.
Although discussions between U.S. and EU officials have taken place at a technical level, von der Leyen has yet to hold direct talks with Trump.
China’s Newly Announced Tariffs and Corporate Investigations
China’s latest measures introduced a 15% tariff on U.S. coal and liquefied natural gas (LNG), alongside a 10% levy on American crude oil, farm machinery, and select vehicle imports, including high-performance sedans.
Additionally, Beijing announced an anti-monopoly probe targeting Google’s parent company, Alphabet. Other companies placed on a watchlist for potential sanctions included PVH Corp, the holding entity for brands such as Calvin Klein, and U.S. biotech firm Illumina.
In response, PVH Corp expressed surprise and disappointment over the development, maintaining that it adheres to all relevant legal and regulatory requirements. While Google declined to comment, Illumina has yet to issue a formal statement.
Export Controls on Critical Metals
Further increasing trade restrictions, China imposed export controls on key industrial and technological metals, including tungsten, a material vital for the electronics, defense, and solar energy industries.
Another notable target in China’s new tariff list is electric trucks imported from the U.S., which could impact Tesla’s Cybertruck—an upcoming model being marketed for Chinese consumers. Tesla has not provided a response regarding this development.
These new tariffs will take effect on Monday, leaving room for potential negotiations in the interim. Chinese officials have signaled an interest in seeking a resolution with Washington, especially given the slowing growth of domestic demand.
Trump’s Stance on Further Tariffs and Fentanyl Regulation
During his first term, Trump engaged in a prolonged trade dispute with China, characterized by tit-for-tat tariffs that disrupted global supply chains and economic stability. Experts warn that these recent developments indicate the beginning of another round of trade conflicts.
Economic analysts at Oxford Economics cautioned that the likelihood of additional tariffs remains high, adjusting their forecast for China’s economic growth accordingly.
Trump has suggested that he may impose even steeper tariffs on China if the country does not take stronger measures to curb the flow of fentanyl, a potent opioid, into the U.S. Beijing has pushed back against this claim, asserting that America’s opioid crisis is an internal issue. Additionally, Chinese officials have vowed to challenge the tariffs through the World Trade Organization while leaving open the possibility of further negotiations.
Market Implications and Future Trade Relations
Although the U.S. supplies only a small fraction of China’s crude oil imports—around 1.7% of total imports valued at approximately $6 billion—the new trade measures could have lasting effects on global markets. Similarly, American LNG accounts for just over 5% of China’s total LNG imports.
Market analysts predict that even if Washington and Beijing find common ground on some trade matters, tariffs may continue to serve as a strategic tool, contributing to economic uncertainty in the months ahead.
In response to Trump’s tariff threats, both Canada and Mexico secured temporary relief after reaching agreements with the U.S. on border security. Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum confirmed the pause on proposed tariffs, allowing for further dialogue over the next 30 days.
Meanwhile, European trade officials have expressed their desire to initiate early discussions with the U.S. in hopes of preventing another wave of tariff disputes. “Through constructive engagement, we believe this issue can be resolved,” stated EU trade representative Maros Sefcovic.
As diplomatic efforts continue, global markets remain watchful of further developments in the ongoing U.S.-China trade dispute.