China has slapped tariffs on US imports in a rapid response to new US duties on Chinese goods, renewing a trade war between the world's top two economies as President Donald Trump sought to punish China for not halting the flow of illicit drugs.
Trump's additional 10 per cent tariff across all Chinese imports into the US came into effect on Tuesday.
Within minutes, China's finance ministry said it would impose levies of 15 per cent for US coal and liquefied natural gas and 10 per cent for crude oil, farm equipment and some vehicles. The new tariffs on US exports will start on 10 February, the ministry said.
Separately, China's commerce ministry and its customs administration said the country is imposing export controls on tungsten, tellurium, ruthenium, molybdenum and ruthenium-related items to "safeguard national security interests".
Donald Trump and Justin Trudeau in 2019. Trudeau says Canada will reinforce its border and appoint a 'fentanyl czar' in efforts to stop the flow of illegal drugs to the US. Source: AAP / Frank Augstein / AP
But there was no such reprieve for China, and a White House spokesperson said Trump would not be speaking with Chinese President Xi Jinping until later in the week.
During his first term in 2018, Trump initiated a brutal two-year trade war with China over its massive US trade surplus, with tit-for-tat tariffs on hundreds of billions of dollars worth of goods upending global supply chains and damaging the world economy.
To end that trade war, China agreed in 2020 to spend an extra US$200 billion ($320 billion) a year on US goods but the plan was derailed by the COVID-19 pandemic and its annual trade deficit had widened to US$361 billion ($577 billion), according to Chinese customs data released last month.
"The trade war is in the early stages so the likelihood of further tariffs is high," Oxford Economics said in a note as it downgraded its China economic growth forecast.
Trump warned he might increase tariffs on China further unless Beijing stemmed the flow of fentanyl, a deadly opioid, into the United States.
China has called fentanyl America's problem and said it would challenge the tariffs at the World Trade Organisation and take other countermeasures, but also left the door open for talks.
Both Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum said they had agreed to bolster border enforcement efforts in response to Trump's demand to crack down on immigration and drug smuggling. That would pause 25 per cent tariffs due to take effect on Tuesday for 30 days.
Canada agreed to deploy new technology and personnel along its border with the United States and launch cooperative efforts to fight organised crime, fentanyl smuggling and money laundering.
Mexico agreed to reinforce its northern border with 10,000 National Guard members to stem the flow of illegal migration and drugs.
The United States also made a commitment to prevent trafficking of high-powered weapons to Mexico, Sheinbaum said.
"As President, it is my responsibility to ensure the safety of ALL Americans, and I am doing just that. I am very pleased with this initial outcome," Trump said on social media.
The Canadian dollar earlier soared after slumping to its lowest in more than two decades. The news also gave US stock index futures a lift after a day of losses on Wall Street, and sent oil prices lower.
Trump suggested on Sunday the 27-nation European Union would be his next target, but did not say when.
EU leaders at an informal summit in Brussels on Monday said Europe would be prepared to fight back if the US imposes tariffs, but also called for reason and negotiation. The US is the EU's largest trade and investment partner.
Trump acknowledged over the weekend that his tariffs could cause some short-term pain for US consumers.
The tariffs as originally planned would require the United States to more than double its own manufacturing output to cover the gap - an unfeasible task in the near term, ING analysts wrote.
Other analysts said the tariffs could throw Canada and Mexico into recession and trigger "stagflation" — high inflation, stagnant growth and elevated unemployment - at home.
