US-China trade tensions escalate as Beijing responds to tariffs

Shreeaa Rathi | TIMESOFINDIA.COM | Feb 04, 2025, 23:50 IST
Trade War: US and China Divided
( Image credit : TIL Creatives )
US-China trade tensions rise as Beijing imposes tariffs on American exports following Trump's latest round of tariffs on Chinese goods. Key items targeted include coal, crude oil, and large vehicles. China also restricts exports of certain metals and blacklists US firms while filing a WTO complaint against the US, despite leaving room for further negotiations.


Tensions between the United States and China have flared once again as Beijing retaliated against President Donald Trump’s latest round of tariffs on Chinese imports. The move, announced by China’s Ministry of Finance, includes new duties on key American exports, raising concerns of a renewed trade war between the world’s two largest economies.

China’s Countermeasures

In response to the White House’s 10% tariffs on Chinese goods, Beijing unveiled a series of economic measures targeting US exports. Among them, a 15% tariff will be imposed on certain types of coal and liquefied natural gas, while a 10% tariff will be levied on crude oil, agricultural machinery, and large-displacement cars and pickup trucks. These new tariffs are set to take effect on February 10.

Additionally, China’s Ministry of Commerce and customs administration announced stringent export controls on over two dozen metal products and related technologies, including tungsten, a critical mineral used in industrial and defense applications, and tellurium, a key component in solar cell manufacturing.

Further intensifying the economic standoff, China has added two US firms—biotech giant Illumina and PVH Group, the parent company of fashion brands Calvin Klein and Tommy Hilfiger—to its unreliable entities list. According to Beijing, PVH engaged in discriminatory practices against Chinese businesses, though specifics were not provided. PVH has denied these allegations, stating it has always adhered to market regulations in its two decades of operation in China.

A Muted but Calculated Response

While China’s retaliatory measures send a strong political message, analysts suggest that their economic impact is relatively limited compared to the US tariffs. According to Julian Evans-Pritchard, head of China Economics at Capital Economics, the tariffs target about $20 billion worth of US imports, approximately 12% of total trade between the two nations—significantly less than the $450 billion in Chinese goods now subject to US tariffs.

“The measures are fairly modest relative to the US moves and have been carefully calibrated to send a message without causing excessive economic disruption,” Evans-Pritchard noted.

Legal Action at the WTO

China is not limiting its response to tariffs alone. Beijing has also taken its grievances to the World Trade Organization (WTO), arguing that Washington’s actions undermine global trade stability and violate international trade rules. In a formal complaint, the Chinese government accused the US of jeopardizing economic cooperation and disrupting the global supply chain.

A New Trade War?

The latest trade dispute unfolds amid broader tensions between Washington and Beijing. The Trump administration’s tariff measures, which also target Mexico and Canada, have been justified as a means to curb illegal immigration and prevent the flow of fentanyl into the US. While Trump agreed to pause tariffs on Mexico and Canada following diplomatic talks, no such reprieve has been extended to China.

There is speculation that the latest tariffs could be the opening salvo in a fresh round of economic hostilities. However, Beijing has signaled its desire to avoid an all-out trade war, as it did during Trump’s first term when both sides imposed heavy duties on each other’s goods.

Room for Negotiation

Despite the rising tensions, both sides have left the door open for dialogue. Trump has hinted at a possible conversation with Chinese President Xi Jinping in the coming days, though Beijing has yet to confirm the talks. If negotiations take place, they could pave the way for easing trade restrictions and addressing broader concerns, including the US-China trade deficit and technology competition.

The latest dispute underscores the fragile state of US-China economic relations. While Beijing’s response appears measured, the potential for escalation remains high. The coming weeks will determine whether the two superpowers can find common ground or if a full-scale trade war is inevitable.



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