In a significant escalation of trade tensions, former President Donald Trump announced sweeping measures against major trade partners, including Canada and Mexico. Notably, goods from China will face an additional 10 percent tariff on top of existing duties. This move comes in response to what Trump labeled a "unilateral tariff hike" by the United States. The announcement was swiftly followed by a statement from China's Ministry of Finance, revealing new tariffs set to take effect next Monday.
Beijing's countermeasures will see 10 percent tariffs imposed on US imports such as crude oil, agricultural machinery, large-displacement vehicles, and pick-up trucks. Additionally, a 15 percent tariff will be applied to imports of coal and liquefied natural gas from the United States. These actions were unveiled shortly after Trump declared his intention to hold a call with Chinese President Xi Jinping within the next 24 hours.
The tensions have been brewing since Trump's warning to potentially increase tariffs on China unless Beijing took steps to curb the flow of fentanyl into the United States. Despite China's assertions that fentanyl remains America's problem, the issue has become a point of contention in the trade negotiations. China's annual trade deficit with the US has widened to $361 billion, according to Chinese customs data released last month, further complicating the situation.
The trade conflict traces back to 2018 when Trump initiated a two-year trade war with China over its substantial US trade surplus. The ensuing tit-for-tat tariffs on hundreds of billions of dollars' worth of goods disrupted global supply chains and inflicted damage on the world economy. In 2020, China agreed to increase its annual spending on US goods by an additional $200 billion, but this plan was derailed by the COVID-19 pandemic.
China has now expressed its intention to challenge the new tariffs at the World Trade Organization while exploring other countermeasures. However, it has left the door open for dialogue with the United States, signaling a willingness to find a resolution through negotiations.
