China Retaliates Against Trump With New Tariffs On US Products As Trade War Looms

China has struck back at President Trump’s recent trade measures by implementing tariffs on American products, including liquid natural gas, coal and oil. The swift retaliation follows Trump’s imposition of a 10 per cent tariff on Chinese goods imported to the USA.

The escalating tensions between the world’s two largest economies sent shockwaves through global markets. The pound declined 0.22 per cent against the dollar to $1.24, while Brent crude slipped 1.3 per cent below $75. The FTSE 100 dropped 0.5 per cent to 8,540, with US-focused companies like Diageo, Rentokil, and Reckitt Benckiser bearing the brunt of the decline.

British government bond yields increased across the board, with the ten-year gilt rising 0.8 per cent to 4.52 per cent, reflecting growing concerns about potential inflationary pressures from heightened trade tensions. The pan-European Stoxx 600 index fell 0.3 per cent, marking its most significant single-day decline in over a month.

The Chinese finance ministry announced levies of 15 per cent on US coal and liquefied natural gas, alongside 10 per cent tariffs on crude oil, farm equipment, and certain automobiles. These measures are set to take effect from 10 February. Beijing has also launched an investigation into Google for alleged anti-trust violations, further straining relations between the two nations.

Oxford Economics has downgraded its Chinese economic growth forecast, noting that the trade war remains in its early stages with a high likelihood of additional tariffs. The situation mirrors the 2018-2020 trade conflict, which significantly disrupted global supply chains and hampered world economic growth.

Despite reaching a temporary agreement with Mexico and Canada, suspending threatened 25 per cent tariffs for 30 days, Trump has maintained his tough stance on China. The US president has specifically demanded that Beijing address the flow of fentanyl into the United States, warning of substantially higher tariffs if the issue remains unresolved.