China retaliates against US tariffs, postpones measures against Mexico and Canada

2025-02-04 16:43:00, Kosova & Bota CNA

Trade war concerns following President Donald Trump's announcement of tariffs on Canada, China and Mexico were felt on the world's major stock exchanges, where share prices fell sharply on Monday.

Stocks steadied after Mr. Trump announced he would delay the imposition of 25 percent tariffs on Mexican and Canadian goods for a month after speaking with the leaders of the two countries. Meanwhile, China said on Tuesday it was imposing tariffs on the United States in retaliation for those announced by Washington.

China said it would impose a 15% tariff on U.S. coal and liquefied natural gas products, as well as a 10% tariff on crude oil, agricultural machinery and heavy-duty vehicles imported from the U.S. China also announced an antitrust investigation into Google and other trade measures.

China's actions come after President Trump announced over the weekend that he would impose tariffs of 25 percent on Mexico and Canada and 10 percent on China.

"We need to stop the flow of people, and we need to stop the fentanyl, and that includes China. Fentanyl has killed at least 200,000 people this year. It's flowing from China through Mexico and Canada. And they need to stop that. If they don't stop it, the tariffs are going to get really high."

China's ambassador to the United Nations, Fu Cong, said on Monday that Beijing would turn to the World Trade Organization.

"We believe this is in violation of WTO rules. And that is why China is filing a complaint with the WTO. We are also aware that we may be forced to take countermeasures. And let me also emphasize that there are no winners from a trade war."

In the coming days, President Trump is expected to speak with Chinese President Xi Jinping, and experts say that Beijing hopes for a softening of the American stance, as happened towards Mexico and Canada.

The consequences of the tariff announcement were felt in all three countries but also in the United States and other capitals, where the value of shares on the stock exchange fell.

Later in Washington, Mr. Trump said he had agreed to a one-month delay in tariffs with Mexico in exchange for measures by that country to stem the flow of migration and illegal drugs across the southern border. He then announced a similar pause with Canada. Markets recovered somewhat after the announcement.

Mexican President Claudia Sheinbaum reacted with cautious optimism.

"I am sure that this month we will have results, positive results for our peoples, and this was the result of the agreement. It was a good, respectful conversation," she said.

Economic researchers say consumers will start to feel the consequences soon and cite historical parallels.

“This goes back to the 1930s, when trade wars were one of the factors that deepened the Great Depression, as economies around the world put up barriers to keep out imports. In the long run, high tariffs would shrink the overall volume of global trade, which would weaken competition and the worldwide spread of technological innovation. And over time, that could slow U.S. and global economic growth,” says Steve Kamin of the American Enterprise Institute.

Mr. Trump acknowledged that these measures could raise prices, but said the cost of higher tariffs would be worth it because they would strengthen American interests. /VOA