China hits back at Trump, imposes 15% tariffs on coal, LNG and 10% for crude oil from US

Trump’s additional 10% tariff on all Chinese imports into the U.S. took effect at 12:01 a.m. Eastern U.S. time this morning.

In response, China’s Finance Ministry announced within minutes that it would impose levies of 15% on U.S. coal and LNG and 10% on crude oil, farm equipment, and some autos.

These new tariffs on U.S. exports will commence on February 10, according to the ministry.

China also revealed that it is launching an anti-monopoly investigation into Alphabet’s Google and adding PVH Corp, the holding company for brands such as Calvin Klein, and U.S. biotechnology company Illumina to its “unreliable entities list.” 

Additionally, China’s Commerce Ministry and its Customs Administration announced export controls on tungsten, tellurium, molybdenum, bismuth, and indium to “safeguard national security interests.” China controls much of the world’s supply of these rare earth elements, which are critical for the clean energy transition.

Yesterday, Trump suspended his threat of 25% tariffs on Mexico and Canada at the last minute, agreeing to a 30-day pause in exchange for concessions on border and crime enforcement with the two neighboring countries. However, there was no such reprieve for China.

“The trade war is in the early stages, so the likelihood of further tariffs is high,” Oxford Economics said in a note as it downgraded its China economic growth forecast. Trump warned he might increase tariffs on China further unless the country stemmed the flow of fentanyl, a deadly opioid, into the United States. 

“China hopefully is going to stop sending us fentanyl, and if they’re not, the tariffs are going to go substantially higher,” Trump said yesterday.

China has called fentanyl the U.S.’s problem and stated it would challenge the tariffs at the World Trade Organization and take other countermeasures but left the door open for talks.

Stocks in Hong Kong pared gains after China’s retaliation.

“Unlike Canada and Mexico, it is clearly harder for the U.S. and China to agree on what Trump demands economically and politically. The previous market optimism on a quick deal still looks uncertain,” said Gary Ng, senior economist at Natixis in Hong Kong.

“Even if the two countries can agree on some issues, it is possible to see tariffs being used as a recurrent tool, which can be a key source of market volatility this year.” 

Canada agreed to deploy new technology and personnel along its border with the United States and launch cooperative efforts to fight organized crime, fentanyl smuggling, and money laundering. Mexico agreed to reinforce its northern border with 10,000 National Guard members to stem the flow of illegal migration and drugs.