China imposes retaliatory tariffs on S$18.9 billion of US products as trade war looms

Tensions between the world's two biggest economies have escalated, with China imposing retaliatory tariffs on US$14 billion (S$18.9 billion) of U.S. imports in response to U.S. President Donald Trump's new tariffs on Chinese goods.

These measures had been announced by Beijing on Feb. 4 following Trump's decision to impose 10 per cent tariffs on Chinese imports, a measure he labelled as an "opening salvo" in a trade offensive against China, Financial Times reported.

China reciprocated with a 15 per cent border tax on imports of U.S. coal and liquefied natural gas, and a 10 per cent tariff on crude oil and agricultural equipment.

These have come into effect on Feb. 10 (Singapore time), China's embassy in Washington said, as reported by The Washington Post.

No deal reached before deadline for China tariffs

China's tariffs are seen as a measure that would create space for negotiations.

Compared to the US$525 billion (S$711 billion) in Chinese goods hit by Trump tariffs, China's tariffs would affect only US$14 billion (S$18.9 billion) of U.S. imports, according to a Goldman Sachs estimate.

Trump was expected to speak to Chinese President Xi Jinping but no deal was reached prior to the deadline, with Trump saying he was in no hurry to hold talks, BBC reported.

Trump additionally intends to cancel duty-free treatment of low-cost packages from China, which allowed producers to avoid tax duties by shipping to consumers directly.

China launched a dispute with the World Trade Organisation on Feb. 5, arguing Trump's actions are "protectionist", according to Reuters.

Chinese authorities also launched an anti-monopoly probe into tech giant Google and added PVH Corp, the holding company of U.S. fashion brands such as Calvin Klein and Tommy Hilfiger, to its "unreliable entity" list.

New tariffs from Trump?

Trump further fuelled fears of a trade war when, on the same day that Chinese retaliatory tariffs came into effect, he promised to announce new 25 per cent tariffs on all steel and aluminium imports, regardless of where they came from, into the U.S.

He told reporters on Air Force One on Feb. 10 that these would affect "everybody", including major U.S. trading partners Canada and Mexico, The Guardian reported.

“And very simply, it’s, if they charge us, we charge them,” Trump said.

Trump did not specify which countries would be affected or if any would be granted similar exemptions, in the event these tariffs were implemented.

Trump had previously promised 60 per cent tariffs on Chinese imports if he was elected but revised this to 10 per cent after taking office, Reuters reported.

He also walked back on proposed 25 per cent tariffs on Canada and Mexico that he had announced in a bid to stop the flow of fentanyl and migrants into the U.S., after the countries reached an agreement on the border.

S'pore could face knock on effects of trade war

Trump's actions have led to fears among world leaders regarding the possibility of American tariffs.

Minister for Foreign Affairs Vivian Balakrishnan opined in parliament on Feb. 4 that Singapore is safe from such direct tariffs due to its favourable trade conditions with the U.S.

Yet Vivian expressed concerns that "friction" in the world trade system, resulting from tariffs and a possible trade war, could have knock-on effects on Singapore.

"I do need to prepare Singaporeans that it will be a turbulent ride in the months or years to come," Vivian said.

Top image from Donald Trump/Facebook & @LogicUniv/X