Beijing, February 4 – China has announced a sweeping package of counter-tariffs on US imports and launched an antitrust investigation into Google, intensifying trade tensions with Washington. The move comes in response to a 10% tariff on Chinese goods imposed by US President Donald Trump, which took effect early Tuesday morning.
China’s Retaliatory Tariffs
In a statement, China’s Ministry of Finance detailed the new tariffs, which include:
- A 15% levy on US coal and liquefied natural gas (LNG).
- An additional 10% tariff on crude oil, farm equipment, and some automobiles.
- These measures will take effect on February 10.
The tariff escalation follows Trump’s decision to impose broad levies on all Chinese imports, citing Beijing’s failure to prevent illegal drug trafficking into the US. The US has also warned of further tariff increases if China retaliates, signaling an extended economic conflict.
China’s Antitrust Probe into Google
In what appears to be a direct countermeasure, China’s State Administration for Market Regulation (SAMR) has opened an antitrust investigation into Google. The probe, announced just moments after Trump’s tariff declaration, aims to examine alleged violations by the US tech giant.
While Google’s search engine remains banned in China, the company still operates through partnerships with local advertisers and businesses. The specifics of the probe remain undisclosed, but analysts see it as a significant escalation in the ongoing US-China trade war.
Export Controls on Critical Minerals
In addition to tariffs, Beijing is imposing export restrictions on key minerals crucial for high-tech industries. These include:
- Tungsten, tellurium, ruthenium, and molybdenum, essential materials for semiconductors and aerospace technology.
The export controls are framed as measures to “safeguard national security interests,” a move that could disrupt global supply chains.
Market Reactions
The financial markets reacted swiftly to China’s countermeasures:
- Sensex and Nifty pared earlier gains, with Nifty falling below 23,500 after initially hitting 23,582. The Sensex dropped 300 points from its day’s high to 77,650 at 11:15 AM.
- The Indian rupee struggled to maintain its gains as investors assessed the economic impact of the tariffs.
- The Chinese yuan weakened, sliding 0.3% to 7.3340 in offshore markets, while China’s onshore market remained closed for the Lunar New Year holiday.
- US equity futures also turned negative, with S&P 500 futures slipping 0.4% and European futures dipping 0.2%.
- Bitcoin dropped 3%, falling to $98,750, reflecting a shift away from riskier assets.
The Bigger Picture
While Trump reached last-minute agreements with Canada and Mexico to delay their tariffs, China has taken a tougher stance, promising further countermeasures while keeping the door open for negotiations.
“Unlike Canada and Mexico, it is clearly harder for the US and China to agree on what Trump demands economically and politically,” said Gary Ng, senior economist at Natixis, Hong Kong. “Even if they reach some consensus, tariffs could still be used as a recurrent tool, making markets highly volatile this year.”
China has vowed to challenge the US tariffs at the World Trade Organization (WTO) and has dismissed accusations linking it to fentanyl trafficking. Meanwhile, Trump has warned of additional tariffs unless Beijing takes decisive action against the opioid trade.
What’s Next?
With both sides digging in, the likelihood of a prolonged trade war looms large. Analysts warn that global markets, technology firms, and commodity exporters will continue facing uncertainty as tensions escalate between the world’s largest economies.
Let me know if you’d like any further refinements.
