China swiftly responded to the latest wave of US tariffs imposed by President Donald Trump, intensifying the ongoing trade war between the world’s two largest economies. Hours after the US announced the new 10% tariff on Chinese imports, Beijing conducted an antitrust investigation of Google and imposed further tariffs on a variety of US products.
China’s Immediate Countermeasures
In Tuesday China’s State Administration for Market Regulation announced the investigation of Google for possible antitrust violations. This action shows the intention of the Beijng to apply pressure to US tech companies in the context of the escalating trade standoff.
In addition, China’s Ministry of Finance announced new tariffs on key US exports. These measures include a 15% tax on coal and liquefied natural gas (LNG), and a 10% tariff on crude oil and agricultural vehicles. This is an explicit response to the trade barriers of Washington, for which Beijing argues that it violates the international trade regulations.
The US unilateral imposition of tariffs is a serious violation of the rules of WTO,” Chinese Finance Ministry said. Not only does it fail to take care of its own economic interests but it also creates havoc for daily trading relations between China and the U.S.
Wider Economic Ramifications
China’s rapid retaliation contrasts sharply with the response from neighboring Canada and Mexico, which managed to secure temporary exemptions from the US’s 25% tariffs after negotiating new trade agreements with the Trump administration.
Beyond tariffs, Beijing has taken further economic countermeasures. Among other actions, it placed PVH Corp., which owns the fashion house Calvin Klein, and the biotech corporation Illumina Inc. on its “unreliable entity list”. Further, China imposed export controls on tungsten-related products which could affect US manufacturers that rely on rare minerals.
Financial markets reacted immediately to the escalating tensions. Offshore yuan (yuan) depreciated by 0.3 and currencies closely linked to Chinese trade (australian nz dollar) dipped almost 1%. Other Asian currencies, including the Thai baht and Indonesian rupiah, also experienced fluctuations, reflecting uncertainty in global markets.
Google in the Crosshairs
Although Google’s core search products have long been shut down in China since 2010, the company retains on China, through its advertising and cloud businesses. The antitrust investigation signals a wider campaign against US techizers in Beijing, a signal that regulationist scrutiny serves as an instrument in the game of trade wars.
This is not the first time that China has attacked major American technology companies when in conflict with Washington. Previous trade tensions saw similar regulatory actions against companies like Apple, Qualcomm, and Microsoft.
Escalating Trade War
President Trump had scheduled the new tariffs to begin immediately at the stroke of midnight on Tuesday, according to Beijing’s alleged lack of control over the influx of illicit drugs, above all fentanyl, in to the United States. He also warned that further tariff hikes could follow if China chose to retaliate—setting the stage for an even fiercer economic confrontation.
As the two countries have tightened them, the trade war that has already lasted for years does not seem to subside. The latest exchange of economic blows highlights the deep divisions between Washington and Beijing, raising concerns over further instability in global markets and supply chains.
With the pressure mounting, the attention of the world is fixed on the extent to which the US and China will push in this high-stakes economic clash.
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