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China will impose tariffs on imports of US liquefied natural gas, coal, crude oil and farm equipment and open an antitrust probe into Google as it retaliates against Donald Trump’s imposition of a blanket additional 10 per cent tariff on its exports.
China announced the tariffs, which ranged from 10 per cent to 15 per cent and will take effect on February 10, as the new US levy came into effect at midnight on Tuesday in Washington, kicking off a second round of the trade war that began during Trump’s first presidential term.
China also said it would impose tariffs on some car exports from the US and announced additional export controls on rare metals.
Trump had unnerved allies and investors with a weekend announcement of huge levies on Canada, Mexico and China, which he accused of not doing enough to curb immigration and the flow of the deadly opioid fentanyl and its precursors into the US.
But the tariffs against Canada and Mexico received a last-minute reprieve on Monday following talks between Trump and Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum.
Trump is expected to speak to China’s President Xi Jinping in the coming days, prompting hopes that the leaders will be able to hammer out a deal to avert the tariffs.
Hong Kong’s Hang Seng index rose as much as 3.3 per cent on Tuesday before erasing some of its gains following the tariff deadline to trade up 2.3 per cent.
The offshore renminbi also lost earlier gains and weakened 0.1 per cent against the dollar to Rmb7.32.
Prices for Brent crude, the international oil benchmark, dropped 0.7 per cent to $75.41 a barrel. West Texas Intermediate, the US benchmark, fell 1.8 per cent to $71.90 a barrel. Natural gas futures fell 2.3 per cent to $3.274 per metric million British thermal unit.
US natural gas exports to China accounted for just 2.9 per cent of total natural gas exports from January to November 2024, according to data from the US Energy Information Administration.
China’s finance ministry said the US tariffs violated World Trade Organization rules. “It is not only unhelpful in solving its own problems, but also undermines the normal economic and trade co-operation between China and the US,” said the finance ministry.
It added that US coal and LNG exports would face a 15 per cent tariff, while crude oil, agricultural machinery, large cars and pick-ups would receive a 10 per cent tariff.
China’s antitrust regulator on Tuesday also announced an investigation into Google for suspected violations of anti-monopoly laws.
While the search engine is blocked in China, along with most of parent company Alphabet’s businesses, the US group profits from Chinese businesses advertising abroad. Chinese phonemakers also widely use its Android operating system.
Alphabet does not break out its revenue from China, but the Asia-Pacific region contributed 17 per cent of sales in 2023.
Meanwhile, China’s commerce ministry said it was imposing export controls on tungsten and “25 rare metal products and technologies such as ammonium paratungstate”, effective immediately.
The commerce ministry also placed PVH Group, an American clothing maker whose brands include Calvin Klein and Tommy Hilfiger, on China’s “unreliable entity list”, a national security blacklist.
The move followed an investigation by China into PVH for alleged discrimination against cotton from China’s western Xinjiang region, where Beijing is accused of human rights violations including forced labour.
The ministry said it was also adding US biotech group Illumina to the list “to safeguard national sovereignty, security and development interests”.
While there was some optimism for an agreement in the coming days to ease trade tensions, economists were doubtful.
“The likelihood of [an] agreement to avoid tariffs appears limited,” said Robin Xing, chief China economist at Morgan Stanley. “Paths to de-escalation . . . remain narrow and would require significant compromises from both sides.”