BEIJING — In a direct response to the imposition of U.S. tariffs on Chinese goods, China announced retaliatory measures on select American imports and launched an antitrust investigation into Google on Tuesday. This comes just moments after President Donald Trump’s tariffs on Chinese products officially took effect.
Additionally, tariffs on imports from Canada and Mexico, scheduled to take effect on the same day, were delayed following a 30-day pause. The pause was enacted as the two countries moved to address President Trump’s concerns about border security and drug trafficking. In the coming days, Trump is expected to hold discussions with Chinese President Xi Jinping.
This is not the first exchange of punitive actions between the U.S. and China. The two nations engaged in an escalating trade war in 2018, when President Trump initiated a series of tariff hikes on Chinese goods, prompting reciprocal measures from China.
Analysts suggest that China is now in a stronger position to navigate the situation, unveiling a range of strategies that extend beyond tariffs and target various sectors of the U.S. economy. The Chinese government remains cautious about destabilizing its own fragile, trade-dependent economy.
Gary Ng, senior economist at Natixis Corporate and Investment Banking in Hong Kong, explained, “China is seeking to implement measures that maximize the impact on the U.S. while minimizing risks to its own economy. In doing so, it is also strengthening its negotiating position.”
John Gong, professor at the University of International Business and Economics in Beijing, described China’s response as “measured,” adding, “China doesn’t want the trade conflict to escalate further. They likely view the recent outcomes with Canada and Mexico as a model for potential resolution.”
Retaliatory Tariffs
China has announced a 15% tariff on coal and liquefied natural gas imports, alongside a 10% tariff on crude oil, agricultural machinery, and large-engine vehicles from the U.S. These tariffs are set to take effect next Monday.
The State Council Tariff Commission emphasized that the U.S.’s unilateral tariff increase violates World Trade Organization regulations, further complicating efforts to resolve economic tensions between the two nations.
The impact on U.S. exports may be limited in some areas. While the U.S. is the world’s largest exporter of liquefied natural gas, exports to China are relatively small. In 2023, the U.S. exported only 173,247 million cubic feet of LNG to China, accounting for approximately 2.3% of total natural gas exports, according to the U.S. Energy Information Administration.
The automobile industry is another sector expected to feel minimal impact, as China imported just 700,000 cars in 2023, with Europe and Japan being the primary suppliers, according to Bill Russo, founder of the Automobility Limited consultancy in Shanghai.
Stephen Dover, Chief Market Strategist at Franklin Templeton, noted that while China’s response appears calculated, the global economy may still face significant consequences. “A prolonged trade war could result in lower global GDP growth, higher inflation in the U.S., a stronger dollar, and upward pressure on U.S. interest rates,” he warned.
Export Controls on Critical Minerals
In addition to tariffs, China has announced export controls on several essential minerals used in high-tech manufacturing. These include tungsten, tellurium, bismuth, molybdenum, and indium—minerals critical to the production of electronics, telecommunications, and defense technologies. These resources have been designated as strategic by the U.S. Geological Survey, and their disruption could pose significant risks to U.S. economic and national security.
Philip Luck, economist at the Center for Strategic and International Studies, noted that the U.S. heavily relies on China for critical minerals. “Gallium, germanium, graphite, and others are vital to many industries, and China’s export control regime could inflict significant harm on our economy,” he said.
Antitrust Investigation into Google
Simultaneously, China’s State Administration for Market Regulation announced an investigation into Google, citing suspicions of antitrust violations. The timing of the probe, which occurred shortly after the U.S. tariffs took effect, has raised questions about its connection to the ongoing trade dispute.
The investigation’s impact on Google’s operations in China remains uncertain. The tech giant has long faced criticism from Chinese smartphone manufacturers over its handling of the Android operating system. However, Google has had a limited presence in China since 2010, when it exited the market due to censorship disputes and a series of cyberattacks.
Google did not immediately respond to requests for comment on the investigation.
