China retaliated immediately on Tuesday after a 10% U.S. tariff on all Chinese goods took effect, imposing its own levies of 10% to 15% on some U.S. products such as coal, liquefied natural gas, crude oil, and agricultural machinery. The escalation in trade tensions between the world’s two largest economies raises the risk of a spiraling trade war. In addition to tariffs, Beijing announced an investigation into Google for alleged anti-trust violations and export controls on items related to critical high-tech components. U.S. gene sequencing company Illumina and PVH Corp. were also added to the “unreliable entity list,” restricting their operations in China. While tariffs on goods imported from Canada and Mexico have been paused for 30 days, no such deal has been reached with China. Trump is expected to speak with Chinese leader Xi Jinping to discuss the ongoing trade disputes. The U.S. tariffs have been criticized by China as violating WTO rules and undermining the rules-based multilateral trading system. China is considering taking legal action against the U.S. tariffs to gather international support. Despite the tensions, many Chinese products are already subject to tariffs introduced by Trump and maintained by Biden. Mainland Chinese markets are closed for the Lunar New Year holiday, while other Asia-Pacific markets were mostly up on news that Canadian and Mexican tariffs had been put on hold.
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