China Hits Back at US With Targeted Tariffs in Latest Trade Spat

China has retaliated against US President Donald Trump's new 10% tariff on all Chinese goods by imposing its own tariffs on US imports, Nikkei Asia reports. The retaliatory tariffs, announced Tuesday, target a range of US products including coal, liquefied natural gas, crude oil, farm equipment, and vehicles.

The move comes as Trump's tariff policy, aimed at penalizing Beijing for its perceived failure to curb the flow of fentanyl into the US, took effect. China's Ministry of Commerce denounced the US tariffs as a violation of World Trade Organization rules, characterizing them as "unilateralism" and "trade protectionism."

China also expanded export controls on shipments of tungsten, tellurium, and other rare earth metals, potentially impacting US industries reliant on these materials. Additionally, China's market regulator announced an investigation into Google for alleged antitrust violations. Google exited the Chinese market in 2010 amidst censorship disputes.

While some observers initially hoped for a negotiated resolution to the escalating trade tensions, China's retaliatory measures dampened such optimism. Despite this, several economists suggest that the current round of tariffs will have a limited impact on China's overall economic growth, given the decline in direct Chinese exports to the US since 2018 and the expectation of further domestic stimulus.

"Both sides are signaling that they are not going crazy but they are serious that they are not going to be pushed around," said Cameron Johnson, senior partner at Tidalwave Solutions, a Shanghai-based supply chain consultancy, to Nikkei Asia.

The 10% tariff alone is unlikely to significantly harm China's economy, according to analysts at BCA Research. However, they caution that this could be the first step in a broader trade war encompassing a wider range of US industries.

Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, described China's response as "not aggressive" due to its limited scope. He noted that the US trade deficit with China, which saw the US import over $400 billion worth of goods from China in the first eleven months of 2024, suggests that the US will face far less economic damage from this latest round of tariffs.

Despite the heightened tensions, both Trump and Chinese President Xi Jinping are expected to engage in talks in the coming days, according to the White House.