China immediately retaliated against the 10% U.S. tariff on all Chinese goods by imposing its own levies of 10% to 15% on some U.S. products. These measures include additional tariffs on coal, liquefied natural gas, crude oil, large-displacement automobiles, and more. The failure to prevent tit-for-tat tariffs raises concerns about a growing trade war between the U.S. and China, the world’s two largest economies. Beijing criticized the U.S. for violating WTO rules and worsening trade cooperation, while also announcing an investigation into Google and imposing export controls on rare earth elements. Mainland Chinese markets were closed, but other Asia-Pacific markets reacted positively to the news of Canadian and Mexican tariffs being put on hold.
China has referred the U.S. tariff measures to the WTO, accusing the U.S. of unilateralism. The addition of U.S. gene sequencing company Illumina and PVH Corp. to the “unreliable entity list” restricts their operations in China. The newly announced Chinese tariffs are aimed at specific products, unlike the broader U.S. tariff affecting all Chinese goods. China produces a significant amount of the world’s tungsten supply, which is critical for chipmakers. Trump’s tariffs, including the 10% China tariff, are part of a strategy to pressure Beijing to address the flow of precursor chemicals used to make fentanyl. China argues that reducing domestic demand in the U.S. is the key to addressing the fentanyl crisis. Trump has warned of substantial tariffs if a deal is not reached with China.
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