Major trade wars have begun with China – and Canada – hitting back on Tuesday against US tariffs imposed by President Donald Trump.
Beijing, which is set to begin its annual parliamentary congress, retaliated immediately, announcing hikes of 10% to 15% on agricultural and food products from America, plus export and investment restrictions on 25 US firms.
Hours before, President Trump gave the green light to an extra 10% levy on Chinese goods that began at 0501 GMT. That meant a cumulative tariff of 20% in response to China’s alleged inaction on stopping the flow of drugs used to make fentanyl, an opioid blamed for tens of thousands of deaths in the US.
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Trump also imposed 25% tariffs on Canada and Mexico, the US’s two top trading partners. Canada has said it has $107 billion in tariffs earmarked on US exports, but will begin with a tranche of $21 billion worth of goods, according to Foreign Minister Melanie Joly.
China’s finance ministry said it should impose an additional 15% tariff on US chicken, wheat, corn and cotton, as well as an extra 10% levy on soybeans, sorghum, pork, beef, aquatic products, fruit, vegetables and dairy imports from the US, from March 10.
“The US’s unilateral tariff measures seriously violate World Trade Organisation rules and undermine the basis for economic and trade cooperation between China and the US,” China’s commerce ministry said in a statement.
“China will firmly safeguard its legitimate rights and interests,” it added.
Some 15 US firms will be added to China’s export control list, including a number linked to defence and security, according to a report by the South China Morning Post.
It said some of the companies likely to be blacklisted were:
- Leidos, an aviation IT and biomedical research company;
- Gibbs & Cox, the US’s largest independent naval architecture and marine engineering firm;
- Group W, an analysis modeling and research firm;
- IP Video Market Info, a physical security technology company that does video surveillance, access control, robotics and weapons detection;
- SourceMap, a supply-chain management firm.
“The restrictions cover “dual-use” items, or goods that carry both civilian and military applications,” the report said.
Analysts said China’s relatively mild response seeks to leave the door open for talks on a possible trade deal – a topic likely to be discussed at the parliamentary congress which began in Beijing this morning.
US markets plunged on Monday afternoon after President Trump indicated there was “no room left” for negotiations with Canada and Mexico.
The S&P 500 fell 1.7% – its worst day this year, while the tech-heavy Nasdaq Composite sank by 2.2%. The Dow Jones Industrial Average dropped by close to 1.5%.
Markets in Asia also fell, with the Nikkei dropping by 1.2% and the Hang Seng Index down 0.3% in Hong Kong. The ASX in Sydney fell by 0.6%, while the KOSPI in Seoul slipped by 0.15%, although the Shanghai Composite edged up by 0.2%.
- Jim Pollard with Reuters
NOTE: The headline on this report was amended on March 4, 2025 and details added on Asian and US markets’ reaction to developments.
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