- China responds with tariffs on US imports in retaliation to new US duties.
- US President Trump’s 10% tariff on all Chinese imports takes effect.
- China announces export controls on strategic materials, citing national security.
- Trump’s warning of further tariff increases if China does not halt fentanyl exports.
- Tensions escalate as both countries brace for further economic fallout.
On Tuesday, February 4, 2025, the US-China trade conflict intensified as China retaliated against the United States’ new tariffs by implementing a series of countermeasures. President Donald Trump’s administration had imposed an additional 10% tariff on all Chinese imports, a decision that came into effect at 12:01 AM ET (05:01 GMT). In response, China wasted no time in announcing its own tariffs and export controls.
The Chinese Finance Ministry revealed that it would introduce tariffs of 15% on US coal and liquefied natural gas (LNG), and 10% tariffs on other key products, including crude oil, farm equipment, and certain automobiles. These tariffs will come into effect on February 10, 2025. In addition, China’s Ministry of Commerce and its Customs Administration issued a statement that it would impose export controls on vital materials such as tungsten, tellurium, ruthenium, and molybdenum, among others. These moves are viewed as China’s way of safeguarding its national security and economic interests.
The Stakes: Rising Tensions in Global Trade
The US-China trade war has shaken global markets, raising concerns about slower economic growth. As both countries retaliate with new measures, supply chains worldwide are facing severe disruptions. Businesses are struggling to adjust to the uncertainty caused by shifting tariffs and export controls.
This conflict started in 2018 during Trump’s administration. It began with the US trade deficit with China, leading to tariffs on hundreds of billions of dollars in goods. A partial deal was reached in 2020, but the COVID-19 pandemic disrupted its progress, and the deficit kept growing, reaching $361 billion by the end of 2024.
Now, full-blown hostilities have returned. Experts warn that the trade war could escalate further. Oxford Economics has already lowered China’s growth forecast, predicting the negative impact of more tariffs and strained trade relations.
Trump’s Strong Stance on Fentanyl and Trade Imbalances
President Trump has made fighting fentanyl trafficking a priority. He believes China plays a key role in sending this deadly opioid into the US. As fentanyl contributes to the nationwide crisis, the Trump administration aims to reduce its imports.
Trump recently warned China that if they don’t stop fentanyl exports, tariffs will increase. His statement has raised tensions, with China accusing the US of unfairly blaming them for the opioid problem. Meanwhile, China sees fentanyl trafficking as a domestic issue.
China’s response focuses on the US using fentanyl as an excuse to escalate tariffs. Despite this, China has not ruled out future talks. They remain open to negotiations and might seek a diplomatic solution to ease the conflict.
The ongoing dispute shows how serious the fentanyl crisis is in the US. It also highlights the delicate balance of trade relations and the potential for dialogue between the two nations.
China’s Response: National Security and Export Controls
In addition to the retaliatory tariffs, China’s decision to impose export controls on vital minerals and materials is another indication of the growing animosity between the two powers. These materials are crucial for the production of electronics, industrial machinery, and various high-tech industries. China’s move to restrict their export to the US is seen as a strategic response aimed at exerting leverage over US industries that rely heavily on these resources.
The inclusion of minerals such as tungsten, tellurium, and ruthenium in the export controls is significant, as these materials play a crucial role in the manufacturing of electronic components, semiconductors, and aerospace technology. The decision underscores China’s intention to use its control over critical resources as a bargaining chip in the trade conflict.
While China insists that these measures are designed to protect its national security, the global implications are clear. The supply of these materials to US industries could be disrupted, leading to shortages and higher production costs. This could, in turn, harm the competitiveness of US companies in global markets.
Canada and Mexico Find Temporary Relief
While the US-China trade war continues, Canada and Mexico received a brief break. On Monday, President Trump decided to hold off on imposing 25% tariffs on these countries. Instead, he agreed to a 30-day pause.
In exchange, Canada and Mexico promised to increase border security. This includes stronger measures to tackle drug smuggling and illegal immigration. Both countries welcomed the decision as a step forward in the negotiations.
Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum both showed support for the deal. Canada will deploy more technology and staff to fight organized crime and fentanyl smuggling. Mexico will send 10,000 National Guard troops to secure its northern border.
For Canada and Mexico, this deal provides relief. The tariffs would have hurt their economies badly. But this temporary agreement remains uncertain, with both countries continuing talks with the US in the next month.
The Uncertain Path Forward
The renewed US-China trade war is set to have profound effects on both economies and the global trading system. With both nations imposing tariffs and export controls on each other, the uncertainty surrounding international trade is growing. The economic fallout from the trade conflict could lead to further instability, with industries around the world bracing for continued disruptions.
As the US and China stand at odds over trade imbalances and the flow of fentanyl, the possibility of further escalation remains high. Both countries are preparing for a prolonged standoff, with global markets anxiously watching the next moves. While diplomatic efforts may provide a glimmer of hope, the path to resolution appears unclear. For now, the trade war continues to dominate global economic headlines, with both nations locked in a battle for economic dominance.