In a major escalation of trade tensions, China has responded to new U.S. tariffs by imposing its own tariffs on American goods and launching an antitrust investigation into Google. Here’s a breakdown of what’s happening:
Background on U.S. Tariffs
On February 1, 2025, U.S. President Donald Trump announced new tariffs on imports from China, Canada, and Mexico. Specifically:
- A 10% tariff was placed on all Chinese goods entering the U.S., starting February 4.
- A 25% tariff was announced for imports from Canada and Mexico, but it was temporarily paused for 30 days after negotiations.
China’s Response
China retaliated with its own tariffs on U.S. goods, set to take effect on February 10:
- 15% tariff on coal and liquefied natural gas (LNG).
- 10% tariff on crude oil, agricultural machinery, and certain vehicles.
These tariffs target key U.S. industries and are seen as a direct response to the U.S. measures.
Antitrust Investigation into Google
At the same time, China’s State Administration for Market Regulation has started an antitrust investigation into Google. The probe will look into whether Google has unfairly limited competition in the Chinese market. This is notable because, although Google’s search services have been blocked in China since 2010, the company still earns significant revenue from advertising and other services in the country.
Additional Measures by China
China has also taken other steps to pressure the U.S.:
- Export controls on critical minerals like tungsten and bismuth, which are vital for high-tech manufacturing.
- Added two American companies, PVH Corp and Illumina, to its “unreliable entities” list, restricting their trade and investment activities in China.
Global Economic Concerns
The back-and-forth tariffs and measures have sparked fears of a full-blown trade war between the U.S. and China, the world’s two largest economies. Experts warn that this could:
- Disrupt global supply chains.
- Raise costs for consumers.
- Slow down global economic growth.
Financial markets have already reacted with increased volatility to these developments.
What’s Next?
Businesses and investors are watching closely, hoping for a resolution to avoid further damage to the global economy. The situation remains fluid, and the actions of both governments will determine whether tensions ease or escalate further.
