China counters with tariffs on US products. It will also investigate Google; Canada to be “Forceful but Reasonable” Responding to Tariffs

As Canada braces for a possible trade war and the economic fallout, Prime Minister Justin Trudeau says his country will bring a “forceful but reasonable” retaliation to any U.S. tariffs.

The Guardian says Trudeau acknowledged potentially difficult economic times ahead. Speaking to an advisory council on Canada-U.S. relations, Trudeau said, “I know Canadians might be anxious and worried, but I want them to know that all levels of government have their backs.”

Canada sends 75 percent of all its goods and services exports to the U.S., its largest trading partner and closest ally. Trudeau points out that the trade spat is “not what we want,” but said if President Trump follows through on his threats, “We will also act.”

A first round of retaliatory tariffs would cover $37 billion of U.S. exports to Canada. If needed, the second round would escalate by imposing tariffs on $110 billion worth of goods.

 

EIJING (AP) — China has countered President Donald Trump’s tariffs on Chinese products with tariffs of its own on multiple U.S. imports as well as announcing an antitrust investigation into Google and other trade measures. This isn’t the first round of tit-for-tat actions between the two countries. China and the U.S. had engaged in a trade war in 2018 when Trump raised tariffs on Chinese goods and China responded in kind. This time, around, analysts said, China is much better prepared to counter. China announced an anti-trust investigation into Google, which has a limited presence in the country.

BEIJING (AP) — China countered President Donald Trump’s across-the-board tariffs on Chinese products with tariffs on select U.S. imports Tuesday (Feb. 4, 2025), as well as announcing an antitrust investigation into Google and other trade measures.

U.S. tariffs on products from Canada and Mexico were also set to go into effect Tuesday before Trump agreed to a 30-day pause as the two countries acted to appease his concerns about border security and drug trafficking. Trump planned to talk with Chinese President Xi Jinping in the next few days.

The Chinese response was “measured,” said John Gong, a professor at the University of International Business and Economics in Beijing. “I don’t think they want the trade war escalating,” he said. “And they see this example from Canada and Mexico and probably they are hoping for the same thing.”

This isn’t the first round of tit-for-tat actions between the two countries. China and the U.S. had engaged in a trade war in 2018 when Trump raised tariffs on Chinese goods and China responded in kind.

This time, analysts said, China is much better prepared to counter, with the government announcing a slew of measures that cut across different sectors of the economy, from energy to individual U.S. companies.

Counter tariffs

China said it would implement a 15% tariff on coal and liquefied natural gas products as well as a 10% tariff on crude oil, agricultural machinery and large-engine cars imported from the U.S. The tariffs would take effect next Monday.

“The U.S.’s unilateral tariff increase seriously violates the rules of the World Trade Organization,” the State Council Tariff Commission said in a statement. “It is not only unhelpful in solving its own problems, but also damages normal economic and trade cooperation between China and the U.S.”

The impact on U.S. exports may be limited. Though the U.S. is the biggest exporter of liquid natural gas globally, it does not export much to China. In 2023, the U.S. exported 173,247 million cubic feet of LNG to China, representing about 2.3% of total natural gas exports, according to the U.S. Energy Information Administration.

China imported only about 700,000 cars overall last year, and the leading importers are from Europe and Japan, said Bill Russo, the founder of the Automobility Limited consultancy in Shanghai.

Further export controls on critical minerals

China announced export controls on several elements critical to the production of modern high-tech products.

They include tungsten, tellurium, bismuth, molybdenum and indium, many of which are designated as critical minerals by the U.S. Geological Survey, meaning they are essential to U.S. economic or national security that have supply chains vulnerable to disruption.

The export controls are in addition to ones China placed in December on key elements such as gallium.

“They have a much more developed export control regime,” Philip Luck, an economist at the Center for Strategic and International Studies and former State Department official, said at a panel discussion on Monday.

“We depend on them for a lot of critical minerals: gallium, germanium, graphite, a host of others,” he said. “So … they could put some significant harm on our economy.”

The response from China appears calculated and measured, said Stephen Dover, chief market strategist and head of the Franklin Templeton Institute, a financial research firm. However, he said, the world is bracing for further impact.

“A risk is that this is the beginning of a tit-for-tat trade war, which could result in lower GDP growth everywhere, higher U.S. inflation, a stronger dollar and upside pressure on U.S. interest rates,” Dover said.

US companies also impacted

In addition, China’s State Administration for Market Regulation said Tuesday it is investigating Google on suspicion of violating antitrust laws. The announcement did not mention the tariffs but came just minutes after Trump’s 10% tariffs on China were to take effect.

It is unclear how the probe will affect Google’s operations. The company has long faced complaints from Chinese smartphone makers over its business practices surrounding the Android operating system, Gong said.

Otherwise, Google has a limited presence in China, and its search engine is blocked in the country like most other Western platforms. Google exited the Chinese market in 2010 after refusing to comply with censorship requests from the Chinese government and following a series of cyberattacks on the company.

Google did not immediately comment.

The Commerce Ministry also placed two American companies on an unreliable entities list: PVH Group, which owns Calvin Klein and Tommy Hilfiger, and Illumina, which is a biotechnology company with offices in China. The listing could bar them from engaging in China-related import or export activities and from making new investments in the country.

Beijing began investigating PVH Group in September last year over “improper Xinjiang-related behavior” after the company allegedly boycotted the use of Xinjiang cotton.

Putting these U.S. companies on the unreliable entities list is “alarming” because it shows that the Chinese government is using the list to pressure U.S. companies to take a side, said George Chen, managing director for The Asia Group, a Washington D.C.-headquartered business policy consultancy.

“It’s almost like telling American companies, what your government is doing is bad, you need to tell the government that if you add more tariffs or hurt U.S.-China relations at the end of the day it’ll backfire on American companies,” Chen said.

PALM BEACH, Fla. (AP) — President Donald Trump says Americans could feel “some pain” from the emerging trade war triggered by his tariffs against Canada, Mexico and China. He’s also claiming that Canada would “cease to exist” without its trade surplus with the United States. The trade penalties that Trump signed Saturday (Feb. 1, 2025) at his Florida resort are causing a mix of panic, anger and uncertainty. And they’re threatening to rupture a decades-old partnership on trade in North America while further straining relations with China. But by following through on a campaign pledge, Trump may have simultaneously broken his promise to voters in last year’s election that his administration could quickly reduce inflation. The tariffs are set to launch on Tuesday.

PALM BEACH, Fla. (AP) — President Donald Trump said Sunday (Feb. 2, 2025) that Americans could feel “some pain” from the emerging trade war triggered by his tariffs against Canada, Mexico and China, and claimed that Canada would “cease to exist” without its trade surplus with the United States.

The trade penalties that Trump signed Saturday at his Florida resort caused a mix of panic, anger and uncertainty, and threatened to rupture a decades-old partnership on trade in North America while further straining relations with China.

Trump on Sunday night returned from Florida and threatened to impose steeper tariffs elsewhere, telling reporters that the import taxes will “definitely happen” with the European Union and possibly with the United Kingdom as well.

He brushed aside retaliatory measures from Canada, saying, “If they want to play the game, I don’t mind. We can play the game all they want.” Trump said he plans to speak with his Canadian and Mexican counterparts on Monday.

By following through on his tariffs campaign pledge, Trump may also have simultaneously broken his promise to voters in last year’s election that his administration could quickly reduce inflation. That means the same frustration he is facing from other nations might also spread domestically to consumers and businesses.

“WILL THERE BE SOME PAIN? YES, MAYBE (AND MAYBE NOT!),” Trump said in a social media post. “BUT WE WILL MAKE AMERICA GREAT AGAIN, AND IT WILL ALL BE WORTH THE PRICE THAT MUST BE PAID.”

His administration has not said what specific improvements would need to be seen in stopping illegal immigration and the smuggling of fentanyl to merit the removal of the tariffs that Trump imposed under the legal justification of an economic emergency. But Trump, speaking to reporters after Air Force One, landed said that the trade imbalances with Canada and Mexico would also need to be erased as a condition for lifting the tariffs.

The president also tried to clarify his post about the possible inflation, saying on Sunday: “We may have in the short term, a little pain, and people understand that. But long term, the United States has been ripped off by virtually every country in the world.”

The tariffs are set to launch Tuesday and triggered confusion as Canada’s U.S. ambassador, Kirsten Hillman, told ABC News that her country was perplexed by the move because “we view ourselves as your neighbor, your closest friend, your ally.”

In his Truth Social post, Trump took particular aim at Canada, which responded with retaliatory measures. Trump is placing a 25% tariff on Canadian goods, with a 10% tax on oil, natural gas and electricity. Canada is imposing 25% tariffs, more than $155 billion Canadian (US$105 billion), on U.S. products, including alcohol and fruit.

Despite Trump’s assertions that the U.S. does not need Canada, one-quarter of the oil that America consumes per day is from its ally to the north. He reiterated his false claim that America subsidizes Canada by running a trade imbalance, a reflection in part of Canada exporting energy to the U.S.

Trump contended that without that surplus, “Canada ceases to exist as a viable Country. Harsh but true! Therefore, Canada should become our Cherished 51st State. Much lower taxes, and far better military protection for the people of Canada — AND NO TARIFFS!”

Prime Minister Justin Trudeau is encouraging Canadians to buy more Canadian goods, and says Trump’s moves will only cause pain across North America. More than 75% of Canada’s exports go to the U.S. Canada will first target alcohol, cosmetics and paper products; a second round later will include passenger vehicles, trucks, steel and aluminum products, certain fruits and vegetables, beef, pork, dairy products and more.

Canada is the largest export market for 36 states and Mexico is the largest trading partner of the U.S.

Mexico’s president, Claudia Sheinbaum, also announced new tariffs and suggested the U.S. should do more within its own borders to address drug addiction. She and Trudeau spoke after Trump’s announcement and agreed “to enhance the strong bilateral relations” between Canada and Mexico, according to the prime minister’s office.

The Chinese government said it would take steps to defend its economic interests and intends to file a lawsuit with the World Trade Organization.

For Trump, the open question is whether inflation could be a political pressure point that would cause him to back down. As a candidate, Trump repeatedly hammered Democrats over the inflation under President Joe Biden that resulted from supply chain issues during the coronavirus pandemic, the Biden administration’s own spending to spur the recovery and Russia’s invasion of Ukraine.

Trump said his previous four years as president had low inflation, so the public should expect the same if he came back to the White House. But he also said specifically that higher inflation would stagger the U.S. as a nation, a position from which he now appears to be retreating with the promise of even more tariffs to come.

The U.S. president did not offer details Sunday about when he would impose tariffs elsewhere, but he said they would be coming “pretty soon” for the EU, which is also composed of U.S. allies.

Larry Summers, treasury secretary in the Clinton administration, said the tariffs were a “self-inflicted wound to the American economy.”

He told CNN’s “Inside Politics” that “on the playground or in international relations, bullying is not an enduringly winning strategy. And that’s what this is.” And the ultimate winner, Summers suggested, would be Chinese leader Xi Jinping because “we’ve moved to drive some of our closest allies into his arms” and “we’re legitimating everything he’s doing by violating all the international norms that we set up.”

Outside analyses make clear that Trump’s tariffs would hurt the voters that he intended to help, meaning that he might ultimately need to find a resolution.

An analysis by the Budget Lab at Yale shows that if the tariffs were to continue, an average U.S. household would lose roughly $1,245 in income this year, in what would be the overall equivalent of a more than $1.4 trillion tax increase over the next 10 years.

Goldman Sachs, in a Sunday analyst note, stressed that the tariffs go into effect on Tuesday, which means they’re likely to proceed “though a last-minute compromise cannot be completely ruled out.”

The investment bank concluded that because of the possible economic damage and possible conditions for removal “we think it is more likely that the tariffs will be temporary but the outlook is unclear.”

January 31, 2025:

WASHINGTON (AP) — The 25% tax that President Donald Trump plans to slap as soon as Saturday (Feb. 1, 2025) on imports from Canada and Mexico could drive up the price of everything from gasoline to pickup trucks to the guacamole dip that features so prominently at American Super Bowl parties. The tariffs would also invite retaliation. Doug Ford, the premier of Ontario, has already vowed to counterpunch by pulling American alcohol off store shelves in the Canadian province. Trump’s tariffs threaten to blow up the trade agreement he himself negotiated with America’s two neighbors in his first term.

WASHINGTON (AP) — The 25% tax that President Donald Trump plans to slap on imports from Canada and Mexico as soon as Saturday (Feb. 1, 2025) could drive up the price of everything from gasoline and pickup trucks, to Super Bowl party guacamole dip.

The tariffs would also invite retaliation. Doug Ford, the premier of Ontario, has already vowed to counterpunch by pulling American alcohol off store shelves in the Canadian province – no idle threat; Canada is the world’s No. 2 market for America’s distilled spirits (behind the 27-nation European Union).

Trump’s tariffs threaten to blow up the trade agreement he himself negotiated with America’s neighbors in his first term. His U.S.-Mexico-Canada Agreement – “the fairest, most balanced, and beneficial trade agreement we have ever signed into law,’’ Trump once declared — was supposed to bring predictability to North American trade, giving businesses the confidence to make investments.

But when it comes to the self-proclaimed “Tariff Man,’’ Trump and his passion for plastering taxes on foreign goods, nothing is predictable, and nothing is ever really settled.

“Tariffs at those levels and at that scope would effectively destroy the agreement that Trump himself negotiated and always brags about,’’ said Scott Lincicome, a trade analyst at the libertarian Cato Institute.

The president says the 25% levies are designed to pressure America’s two neighbors to do more to stop the flow of undocumented immigrants and fentanyl into the United States.

Michael Robinet of S&P Global Mobility and many other analysts suspect the tariff threat is also designed to get Canada and Mexico to go along with America’s demands for changes to the USMCA when it comes up for renewal next year.

Robinet, executive director of automotive consulting at S&P Global, said he doubts that Trump will go ahead with 25% across-the-board tariffs on Canadian and Mexican imports – what he calls a “shock-to-the-system’’ approach that would freeze the North American economy in a “Tariff Winter.’’ Instead, Robinet said, Trump might postpone or phase in the tariffs or initially exempt some industries to show Canada and Mexico how much worse things could get if he doesn’t get his way.

Trump pressured Mexico and Canada into agreeing to the USMCA five years ago, partly to narrow the United States’ big trade deficit – the gap between what the U.S. sells and what it buys.

It hasn’t worked out that way.

The U.S. deficit in the trade of goods of Mexico has widened from $106 billion in 2019 to $161 billion in 2023 (the last full year for which numbers are available). That is partly because Mexico has replaced China, locked in an ongoing trade war with the United States, as the source of many U.S. imports – furniture, textiles, shoes, laptops, computer servers.

The trade gap in goods with Canada has ballooned, too: From $31 billion in 2019 to $72 billion in 2023. The deficit largely reflects America’s imports of Canadian energy.

“The USMCA has not met the goals that Trump set forth for it. Our trade deficit with Canada and Mexico is bigger than it was, considerably,’’ said Lori Wallach, director of the Rethink Trade program at the American Economic Liberties Project and a longtime critic of America’s free trade pacts. “A lot of jobs have been offshored to Mexico since USMCA.’’

When the USMCA comes up for renewal next year, the U.S. is expected to press for rules that would do more to encourage factories to produce in the United States. And it could seek a crackdown on Chinese goods being sent through Mexico to the United States to evade tariffs that Trump and President Joe Biden imposed on Beijing.

The United States now does far more business – exports and imports alike – with both Canada and Mexico than it does with China. In 2023, U.S. trade of both goods and services with Canada and Mexico came to more than $1.8 trillion, compared with $643 billion with China. Because of USMCA – and the regional trade deal it replaced in 2020 – most products cross the region’s borders tariff-free.

The threatened 25% tariffs are causing heartburn in corporate boardrooms. If Trump goes ahead with his threat, tariffs would surge from $1.3 billion to $132 billion a year on Mexico’s imports to the United States and from $440 million to $107 billion on Canada’s, according to the tax and consulting firm PwC.

And no one knows if Trump will really pull the trigger or how long the tariffs would stay in place if he does. “It’s really thrown industry into this turmoil of anxiety,” said trade lawyer Chandri Navarro, senior counsel at Baker & McKenzie. “What industry likes is certainty. You’re making production decisions, supply chain decisions, purchasing decisions five years out.’’

Trump views tariffs as a fix-it for most of what ails the economy. He says they raise money for cuts in income and corporate taxes, encourage companies to move production to the United States and offer useful leverage in pressuring other countries to make concessions on trade and other issues.

Trump administration officials also say critics of potential tariffs shouldn’t view them in isolation, arguing that their other policies, including lowering taxes and easing regulations, will strengthen the economy.

Companies are scrambling to prepare. Some bought goods and shipped them to the United States ahead of time to beat the tariffs. Others are calculating how much of the cost they can pass along to their customers. “Unfortunately, it’s going to impact a lot of consumers,’’ said Dave Evans, co-founder and CEO of Fictiv, a San Francisco company that helps clients manage their supply chains in plastics and metals. “We saw this in his first term. A tariff isn’t fully absorbed by the companies.’’

Canada and Mexico are bracing, too. Chrystia Freeland, the former finance minister who represented Canada in USMCA negotiations, has called for retaliation if Trump moves ahead with tariffs. “Being smart means retaliating where it hurts,” said Freeland, who is running to replace prime minister Justin Trudeau. “Our counterpunch must be dollar-for-dollar — and it must be precisely and painfully targeted: Florida orange growers, Wisconsin dairy farmers, Michigan dishwasher manufacturers, and much more.”

Likewise, Mexican President Claudia Sheinbaum promised in November that “for every tariff, there will be a response in kind.’’