China has swiftly hit back against new U.S. tariffs, imposing levies on American imports as tensions between the world’s two largest economies escalate. The move, announced on Tuesday (Feb 4), comes in response to President Donald Trump’s decision to impose an additional 10% tariff on all Chinese goods entering the U.S., effective immediately.

In retaliation, China’s Finance Ministry said it would apply tariffs of 15% on U.S. coal and liquefied natural gas (LNG), as well as 10% on crude oil, farm equipment, and certain automobiles, starting Feb 10. Additionally, Beijing has launched an anti-monopoly investigation into Google and placed companies like Calvin Klein’s parent firm, PVH Corp, and U.S. biotech company Illumina on its "unreliable entities list."

China also announced new export controls on key rare earth materials—including tungsten, tellurium, and molybdenum—essential for clean energy and high-tech industries, a move that could disrupt global supply chains. Unlike Canada and Mexico, which managed to strike last-minute deals with Trump to avoid steep tariffs, China received no such reprieve. A White House spokesperson confirmed that Trump would not be speaking with Chinese President Xi Jinping until later in the week.

This latest trade clash mirrors the bitter tariff war that unfolded during Trump’s first term, when tit-for-tat measures disrupted global markets. In 2020, China had pledged to increase U.S. imports by $200 billion as part of a trade deal, but the COVID-19 pandemic derailed those commitments, and China’s trade deficit with the U.S. has since widened to $361 billion.

Trump has justified the new tariffs as a way to pressure China into curbing the flow of fentanyl, a deadly opioid contributing to America’s drug crisis. "China hopefully is going to stop sending us fentanyl, and if they're not, the tariffs are going to go substantially higher," he warned. Beijing, however, has dismissed fentanyl as a U.S. domestic issue and vowed to challenge the tariffs at the World Trade Organization. While leaving the door open for negotiations, China has made it clear it will not back down easily.

Relief for Canada and Mexico: Meanwhile, in contrast to the escalating U.S.-China trade war, Canada and Mexico have secured temporary relief. Trump agreed to pause his planned 25% tariffs on both countries for 30 days after securing commitments on border security and crime enforcement. Canada will deploy advanced technology and personnel along its U.S. border to combat organized crime, fentanyl smuggling, and money laundering. Mexico, in turn, has pledged to strengthen its northern border with 10,000 National Guard troops to curb illegal migration and drug trafficking. The agreements were met with relief in both countries, as well as in global markets. "That’s very encouraging news," said Chris Davison, head of a Canadian trade group for canola producers. "We have a highly integrated industry that benefits both countries."

The EU Could Be Next: Trump has hinted that the European Union may be his next trade target, though he has not specified when. European leaders at a summit in Brussels on Monday warned that they would retaliate if the U.S. imposes tariffs but expressed hope for negotiations. While Trump suggested that Britain, which left the EU in 2020, might be spared, analysts warn that further tariffs could push Canada and Mexico into recession and trigger economic instability in the U.S. itself. Some experts predict "stagflation"—a combination of high inflation, slow growth, and rising unemployment—if the trade war continues to escalate. Despite concerns, Trump remains firm on his stance, arguing that tariffs are necessary to reduce immigration, combat drug trafficking, and strengthen American industries. "As President, it is my responsibility to ensure the safety of ALL Americans, and I am doing just that," he said.

Disclaimer: This image is taken from Reuters.