President Donald Trump pulled back and paused the enforcement of 25% tariffs on Canada and Mexico at the last minute, temporarily diverting a disastrous trade war in North America. In exchange, Mexico agreed to deploy 10,000 troops to reinforce its border with the United States. Shortly after, Canada followed suit with its own border security measures after a last-minute conversation between Trump and Prime Minister Justin Trudeau.
However, China was exempt from these negotiations, and as of today, a 10% tariff on all imported Chinese goods has taken effect. In response, Chinese officials announced their own targeted tariffs on select American imports and threatened legal action against several American-based companies, including Google.
Starting on February 10, China will impose a 15% tariff on U.S. coal, liquefied natural gas (LNG), and 10% on other products such as crude oil, farm equipment, and select American vehicles. They will also exert export controls on critical metals such as tungsten– an essential for electronic, military equipment, and solar panels.
Beyond tariffs, China is launching an anti-monopoly investigation into Google. Other companies caught in the crossfires are PVH Corp., a fashion holding company for popular brands such as Calvin Klein and Tommy Hilfiger, and the U.S. biotech company Illumina. Additionally, China plans to challenge U.S. tariffs at the World Trade Organization.
While China’s response isn’t as extreme as Trump’s sweeping tariffs, it’s a measured move to pressure Washington to engage in negotiations. As the world’s second-largest economy, an all-out trade war with the United States could have severe consequences for both global markets.
White House representative Karoline Leavitt confirmed that Trump and Chinese President Xi Jinping are expected to discuss the matter soon; however, it is unclear whether talks will take place once China’s tariffs are enforced.
Although tensions with Canada and Mexico have been temporarily diffused, the risk of further escalation remains if all parties fail to reach an amicable agreement.
