In a bold response to President Donald Trump’s aggressive tariff strategy, China has retaliated with its own set of tariffs, setting the stage for a major trade showdown. With technology, retail, and energy sectors caught in the middle, tensions between the two economic giants continue to escalate. Meanwhile, Trump has warned that his tariff policy is only getting started.
China Retaliates with New Tariffs
Amid Trump’s efforts to reassert American dominance in global trade, his administration imposed a sweeping 10% tariff on Chinese imports. In response, Beijing fired back with its own 15% tariff on key U.S. exports, including coal and liquefied natural gas. Other products such as crude oil, large-engine vehicles, and agricultural machinery will also face a 10% tariff, according to the Associated Press.
The move is expected to have significant economic consequences, with former State Department economist Philip Luck warning that China holds substantial leverage over the U.S. due to its control of critical minerals such as gallium, germanium, and graphite—all essential for high-tech manufacturing.
“So… they could put some significant harm on our economy,” Luck explained, highlighting China’s export restrictions on key minerals like bismuth, indium, molybdenum, tellurium, and tungsten.
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Tech and Retail Giants in the Crossfire
China has also ramped up pressure on American corporations. Biotech company Illumina and PVH Group (the parent company of Calvin Klein and Tommy Hilfiger) have been added to China’s unreliable entities list, restricting their operations within the country. Additionally, China has launched an antitrust investigation against Google, adding further strain to U.S.-China business relations.
“A risk is that this is the beginning of a tit-for-tat trade war, which could result in lower GDP growth, higher U.S. inflation, a stronger dollar, and rising interest rates,” warned Stephen Dover, chief market strategist at Franklin Templeton Institute.
Trump’s Next Move: Ending the “De Minimis” Rule
In a decisive move, Trump abolished the de minimis rule, which previously allowed imports valued under $800 to enter the U.S. duty-free. This change directly affects major Chinese retailers like Shein and Temu, which rely on cheap shipping and duty-free transactions to dominate the U.S. e-commerce market.
Michael Sobolik, a senior fellow at the Hudson Institute, believes this move could force retailers to raise prices, impacting American consumers.
“If Shein and Temu behave like most companies, I wouldn’t be surprised if they pass on the costs,” Sobolik told The Telegraph. “But their entire business model depends on how insanely cheap these products are.”
With Shein and Temu accounting for over 600,000 duty-free shipments per day, this policy shift is expected to disrupt U.S. Customs operations, which process nearly 1 billion shipments annually.
China Condemns Tariffs, But Trump Stands Firm
China’s State Council Tariff Commission issued a statement condemning the new tariffs, arguing that they violate World Trade Organization (WTO) rules and damage U.S.-China economic ties.
“The U.S.’s unilateral tariff increase seriously violates the rules of the World Trade Organization. It is not only unhelpful in solving its own problems but also damages normal economic and trade cooperation between China and the U.S.,” the commission stated.
Despite the backlash, Trump remains undeterred. Ahead of high-stakes negotiations with Chinese President Xi Jinping, the commander-in-chief warned that this was just the beginning.
“If we can’t make a deal with China, then the tariffs will be very, very substantial,” Trump declared, signaling potentially harsher economic penalties on Beijing.
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Breakthrough with Canada and Mexico
While some critics have questioned Trump’s tariff strategy, the approach has already yielded results. On Monday, Canada and Mexico reached an agreement with the U.S. to delay planned tariffs in exchange for stepping up efforts to secure the southern border.
Michael Steel, senior VP of communications for Business Roundtable, praised Trump’s leadership, stating:
“Business Roundtable applauds President Trump for working swiftly with Mexico and Canada to strengthen security at the border, curb the flow of fentanyl into the country, and pause the implementation of tariffs.”
He further emphasized that these developments could lead to long-term trade agreements that benefit North American economies.
Conclusion: Trade War Heats Up
With China retaliating and Trump preparing for more trade actions, the U.S.-China economic battle is far from over. While American businesses brace for impact, Trump’s administration appears determined to reset the global trade balance in favor of the U.S..
As negotiations with China’s leadership approach, all eyes are on whether this economic standoff will escalate into a full-blown trade war or pave the way for a historic new trade deal.
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