Published 12:03 IST, February 4th 2025
China's Tit-For-Tat On US Goods After Trump Imposes Tariffs
As global markets remain on edge, investors and businesses must prepare for continued uncertainty, supply chain disruptions, and fluctuating currency values.

The long-standing U.S.-China trade conflict has taken another turn, with both countries imposing new tariffs on each other. China retaliated swiftly after U.S. President Donald Trump implemented a 10% tariff on all Chinese imports. This move has reignited tensions between the world’s two largest economies, raising concerns about economic growth, market stability, and supply chain disruptions.
Within minutes, China's Finance Ministry said it would impose levies of 15% for U.S. coal and LNG and 10% for crude oil, farm equipment and some autos. The ministry said the new tariffs on U.S. exports will start on Feb. 10.
US Tariffs: China’s Retaliation
China responded with targeted tariffs on U.S. exports, focusing on energy, agriculture, and machinery—sectors that are crucial to the U.S. economy. Shier Lee Lim, Lead FX & Macro Strategist at Convera, Singapore, noted that while these tariffs are designed to pressure key U.S. industries, China is carefully managing domestic inflation risks.
"Our analysis suggests the U.S. GDP could slow by 0.8–1.0 percentage points in 2025, whereas China’s impact will be around 0.4 percentage points, thanks to its trade diversification since 2018," said Lim.
Trump’s Stance on China
While Trump suspended planned tariffs on Mexico and Canada, he remains firm on China, which he sees as both an economic and political rival. Naka Matsuzawa, Chief Macro Strategist at Nomura, Tokyo, believes that unless China makes significant economic concessions, Trump will not back down.
"Unlike Mexico and Canada, China is seen as a direct economic competitor. Cutting China off from supply chains is a key part of Trump’s trade policy," Matsuzawa explained.
Market Reactions On Tariffs
The trade tensions have led to increased market volatility, with investors closely watching developments. Charu Chanana, Chief Investment Strategist at Saxo, Singapore, pointed out that the lack of a deal before the tariff deadline has fueled uncertainty.
"Markets are clearly overreacting, but it underscores how fragile sentiment is right now. Even if a deal is announced, volatility could persist," said Chanana.
Hong Kong stocks have already felt the impact, with Kenny Ng, Strategist at China Everbright Securities International, noting that gains have narrowed sharply. However, he expects Hong Kong stocks to recover and test resistance levels between 21,000 and 21,300 this month.
Despite the new tariffs, negotiations between China and the U.S. are still possible. Steven Leung, Director of Institutional Sales at UOB Kay Hian, Hong Kong, believes that China’s latest tariffs are a bargaining tactic to gain leverage before any trade talks.
"The market will take it as a positive sign once they set a negotiation date. Until then, expect short-term selloffs and uncertainty," Leung commented.
Meanwhile, the U.S. dollar is strengthening, with Jeff Ng, Head of Asia Macro Strategy at SMBC, Singapore, predicting that USD/CNH will rise above 7.40. Gary Ng, Senior Economist at Natixis, Hong Kong, warns that tariffs could become a recurring tool, adding to market volatility throughout the year.
As global markets remain on edge, investors and businesses must prepare for continued uncertainty, supply chain disruptions, and fluctuating currency values in the months ahead.
Inputs from reuters…
Updated 16:13 IST, February 4th 2025