On Tuesday at 1 PM local time in China, the US officially increased tariffs on all Chinese-made goods by an additional 10%. Just two minutes later, China hit back with its own countermeasures. The Chinese Ministry of Finance announced new tariffs on US imports, including a 15% tax on certain types of coal and liquefied natural gas and a 10% tariff on crude oil, agricultural machinery, large-displacement cars, and pickup trucks. These new tariffs will take effect on February 10.
In addition, the Chinese Customs Tariff Commission imposed a 50% tariff on US coal and LNG imports, while the Commerce Ministry restricted US access to key minerals used in semiconductors, missile systems, and solar cells. China also launched an antitrust investigation into Google and added PVH, the parent company of Tommy Hilfiger and Calvin Klein, to its unreliable entities list. Beijing has also stated that it will challenge the US tariffs at the World Trade Organization (WTO), although past efforts have been largely ignored by Washington.
A Familiar Strategy from Trump
This is not the first time President Trump has used tariffs as a tool to pressure trading partners. During his first term, he imposed tariffs on Chinese imports worth around $370 billion, triggering a full-scale trade war. China retaliated with its own tariffs on $185 billion worth of US goods. The result was higher costs for American businesses and consumers.
Trump has since recognized tariffs as an effective bargaining chip. He previously used them to pressure Mexico and Canada, imposing broad 25% tariffs until they took action on drug trafficking and illegal migration. Similarly, the latest 10% tariff increase on China is just an opening move in a larger negotiation. Trump has hinted that tariffs could go much higher if a deal is not reached.
Read more: Trump’s Tariff Moves: China Hit, Canada & Mexico Delayed
Market Reactions and Global Implications
Following the announcement, global markets took a hit. Stocks fell sharply, oil prices rose, and currencies weakened against the US dollar. However, markets later stabilized when news emerged that Trump had paused tariffs on Canada and Mexico for one month. Within 24 hours, both countries agreed to stronger measures against drug trafficking and migration to avoid further tariffs.
China, however, is in a different league. Its economy is massive, and it has weathered trade tensions before. The latest 10% tariff increase is far from the “maximum pressure” Trump has promised. He has previously suggested tariffs as high as 60% on Chinese goods. Trump’s key demands from China revolve around trade, drugs, and geopolitical leverage. The question remains: will China concede, or will this trade war escalate further?
Read more: Trudeau announces tariff deal with Trump
The Bigger Picture: Trade Deficit and China’s Dominance
Trump has long criticized the US trade deficit, which reached $1.2 trillion in 2024. The deficit with China alone was over $270 billion in the first 11 months of last year. Despite years of tariffs, China remains one of the top sources of US imports. Moreover, platforms like Temu and SHEIN have exploited loopholes to ship products tariff-free under the “de minimis” rule, which the new tariffs aim to eliminate.
Meanwhile, China continues to dominate global trade. In 2024, it posted a record trade surplus of nearly $1 trillion. China now accounts for 27% of global industrial production, up from 24% in 2018, and projections suggest this could rise to 45% by 2030. It has also become the world’s top car exporter.
With Trump’s re-election campaign ramping up, his trade war strategy is back in full force. How far he will go—and how China will respond—remains to be seen. One thing is certain: the global economy is bracing for impact.