China retaliated against the U.S. immediately after the U.S. imposed a 10% tariff on all Chinese goods, by announcing its own tariffs ranging from 10% to 15% on some U.S. products. The Chinese tariffs will target items like coal, liquefied natural gas, crude oil, agricultural machinery, automobiles, and pickup trucks. China also launched an investigation into Google for anti-trust violations and imposed export controls on items related to rare earth elements. Additionally, it added Illumina and PVH Corp. to an “unreliable entity list,” restricting their operations in China. The U.S. tariffs, which violate World Trade Organization rules according to China, could lead to a spiraling trade war between the two countries.
While the U.S. tariffs on Canada and Mexico have been paused, the Chinese tariffs went into effect as scheduled. The move may impact industries such as chipmakers that rely on Chinese tungsten imports. The U.S. imposed the tariffs in an attempt to pressure China to curb the flow of precursor chemicals used to make fentanyl. China argues that reducing domestic demand in the U.S. is the key to addressing the fentanyl crisis, and that tariffs could hinder future cooperation on drug control. President Trump has indicated that if a deal with China is not reached, the tariffs could be increased substantially.
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