Chinese tariffs to take effect, ratcheting up trade war with U.S.

China’s retaliatory tariffs on goods from the United States are due to come into effect Monday, escalating economic tensions between Beijing and Washington and dampening hopes that the two countries could strike a deal to avoid a damaging trade war.

Beijing announced the measures Tuesday, just minutes after President Donald Trump’s 10 percent tariffs on all Chinese goods were implemented. They included a 15 percent levy on imports of U.S. coal and liquefied natural gas, as well as a 10 percent tariff on agricultural equipment and crude oil, starting Monday.

“According to the Chinese government’s announcement, Chinese countermeasures come into effect on Feb 10,” Liu Pengyu, a spokesman for the Chinese embassy in Washington, said by email late Sunday night.

While the leaders of Canada and Mexico managed to strike political deals to delay the implementation of the 25 percent tariffs Trump had slapped on their products, China has not struck such a deal. Trump and Chinese leader Xi Jinping were expected to talk last week, but that call has not happened.

Still, many experts saw Beijing’s response as relatively limited and designed to create room for negotiation before the tariffs came into effect Monday local time.

“For now, China has exercised restraint in its countermeasures,” said Shen Dingli, a Shanghai-based international relations scholar, adding that he believes that the two nations will strike some type of deal.

“It has only targeted certain energy products exported by the U.S. rather than implementing a full-scale, reciprocal retaliation,” Shen said. “The most extreme response would be to repeat the approach of the previous trade war, where China retaliated symmetrically.”

China’s tariffs cover a total of $14 billion worth of U.S. imports, compared to the $525 billion in Chinese goods hit by Trump tariffs, according to a Goldman Sachs estimation.

Beijing also used a slew of other weapons last week to retaliate against Trump’s measures, including restrictions on exports of minerals used to make high-tech products and an antitrust investigation of Google. China’s Ministry of Commerce also blacklisted PVH, the U.S. fashion giant that owns brands including Tommy Hilfiger and Calvin Klein, and Illumina, a genetic testing firm.

Beijing also formally launched a dispute with the World Trade Organization on Wednesday.

Some of these moves were more symbolic than impactful: Google, for example, does not have much business in China, and it is blocked from the Chinese internet.

In his executive order earlier this month imposing the tariffs, Trump accused China of allowing fentanyl to be trafficked into the United States. His order also canceled the “de minimis” loophole for Chinese goods, which allows low-value goods to enter the United States without import taxes, citing the possibility that it could facilitate the fentanyl trade.

On Friday, Trump temporarily restored the loophole, arguing that the infrastructure was not in place to collect tariffs for these packages. The order would have hit shipments to the U.S. from popular e-commerce platforms such as Shein and Temu.

Trump used tariffs against China in his first term, launching a trade war with Beijing to address what he saw as the country’s unfair economic practices, which eventually resulted in a “phase one” deal in 2020.

Under that deal, Xi promised China would buy an additional $200 billion in American goods over two years but it did not fulfill the pledge: China purchased fewer than 60 percent of the products it committed to buy, according to the Peterson Institute for International Economics.

The new levies from Beijing will disproportionately damage employment opportunities in counties which voted for Trump, according to Brookings Institution research, with around two-thirds of all jobs in industries affected by the tariffs in Trump-voting areas of states like Indiana, Michigan and Texas. The impact was more evenly distributed across party lines in the first trade war.

China is more prepared for a trade war this time around: It has developed a broader suite of weapons to push back, utilizing its dominant position in many critical supply chains. But the country’s economy is struggling, and a tit-for-tat threatens Chinese exports, a lonely bright spot amid otherwise sluggish growth.

“Indeed, the domestic economy is now facing a challenging situation,” said Zhu Tian, an economics professor at the China Europe International Business School in Shanghai. “I think that may play a part in this response because obviously China relies, in terms of exports, more on the U.S. than the U.S. relies on China.”

“China is going to gain more from the negotiation with the U.S. than the other way around,” he added.