Evelyn Reynolds

China’s Finance Ministry said Tuesday it will impose additional tariffs of 15% on coal and liquefied natural gas imports from the U.S., starting Feb. 10.
China will also levy 10% higher duties on American crude oil, farm equipment, and certain cars and trucks, as well as enacting export controls on certain products related to critical minerals.

China unveiled a series of retaliatory measures against the U.S. on Tuesday, shortly after U.S. tariffs on Chinese goods took effect, raising concerns of a broader trade war between the world’s two largest economies.
China’s Finance Ministry said Tuesday it will impose additional tariffs of 15% on coal and liquefied natural gas imports from the U.S. and 10% higher duties on American crude oil, agricultural machinery and certain cars, starting Feb. 10.

China reiterated that the imposition of additional levies of 10% by the U.S. “seriously violates the rules of the World Trade Organization … destructs the normal bilateral economic and trade activities” according to a CNBC translation of the statement in Chinese.
In a separate statement Tuesday, Chinese Commerce Ministry and customs officials announced to impose export controls on a range of items and technologies related to certain critical minerals, including tungsten, tellurium, ruthenium, molybdenum and ruthenium.
China’s tariff announcement is more of a “symbolic move for now,” said Louise Loo, China lead economist at Oxford Economics, who estimates the additional duties could raise the effective tariff rate on U.S. imports into China by close to 2 percentage points.
Loo, however, cautioned that a second U.S.-China trade war was “clearly in the early stage” and sees “a very high likelihood” of further rounds of tariffs from the two countries.

Chinese offshore yuan was little changed against the U.S. dollar, following the announcements. The mainland’s markets, which have remained closed due to the weeklong Lunar New Year holiday, will resume trading Wednesday.

China’s State Administration of Market Regulation also said it has decided to initiate an investigation into Alphabet’s Google as the American technology giant was suspected of violating the country’s anti-monopoly law.
Google pulled its internet and search engine services in China in 2010, but still has some operations focused on Chinese businesses looking to advertise on Google platforms abroad.
“These moves are warnings that China intends to harm US interests if need be but still give China the option to back down,” Julian Evans-Pritchard, head of China economics at Capital Economics, said in a note.
Pritchard acknowledged that the tariffs proposed by China could be postponed or canceled before they come into effect next Monday, and the Google investigation could end without any penalties.
U.S. President Donald Trump on Monday agreed to a 30-day pause on the implementation of the planned 25% tariffs on imports from Canada and Mexico, as the two countries agreed to take steps to prevent the illicit drug trafficking of fentanyl into the U.S.
China, however, did not get any such reprieve.
“The overarching geo-economic dimensions to U.S.-China trade means that resolution will be far more fraught than is the case with Mexico and Canada,” said Vishnu Varathan, head of macro research for Asia ex-Japan at Mizuho Bank.

Swift retaliation

As Trump started his second term, he ordered his administration to investigate Beijing’s compliance with a trade deal struck during his first presidency in 2020. The final result of the assessment will be delivered to Trump by April 1, potentially setting the stage for further tariff actions, economists said.

White House press secretary Karoline Leavitt reportedly said Monday that Trump and Chinese president Xi Jinping could talk “in the next couple of days.”
Trump on Saturday signed into law the long-threatened 10% tariffs against China on top of the existing tariffs of up to 25% on Chinese goods levied during his first presidency.
The additional duties would reduce China’s real gross domestic product growth by 50 basis points this year, economists at Goldman Sachs said in a report Monday, reinforcing calls for stronger domestic stimulus measures to offset impacts from the rising tariffs.
The investment bank expects China’s real GDP growth to slow to 4.5% this year and domestic consumer inflation to rise just 0.4% due to weak demand and a prolonged real estate crisis. More

President Donald Trump commended the Federal Reserve for its decision last week to leave interest rates unchanged.
“Holding the rates at this point was the right thing to do,” he told reporters.

U.S. President Donald Trump looks on as he signs an executive order in the Oval Office at the White House in Washington, U.S., Jan. 31, 2025. 
Carlos Barria | Reuters

President Donald Trump agreed with the Federal Reserve for its decision last week to leave interest rates unchanged, an early pivot from his previous demand that the central bank ease “immediately.”
In an exchange with reporters Sunday, Trump said holding its key borrowing level in a range between 4.25%-4.5% was the correct move for the Fed.

“I’m not surprised,” he said regarding the decision, according to multiple reports. “Holding the rates at this point was the right thing to do.”
The statement stood in stark contrast to one Trump delivered when speaking remotely to the World Economic Forum in Davos, Switzerland. In a Jan. 23 appearance, Trump said he would “demand that interest rates drop immediately.”
The president has no direct authority over the Fed, though he does nominate the chairman as well as other board members. Current Chair Jerome Powell is a Trump nominee, and a frequent target of the president’s criticism.
Markets don’t expect the Fed to lower rates until at least June. In his post-meeting news conference last Wednesday, Powell repeatedly asserted that the Fed doesn’t need to be in a “hurry” to lower further after shaving a full percentage point off the fed funds rate from September to December in 2024.
The Fed’s decision-making got potentially more complicated after Trump on Saturday said he would impose aggressive tariffs against Canada, Mexico and China, the three largest U.S. trading partners. Economists worry that the tariffs will drive up prices at a time when inflation has shown signs of easing.

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U.S. President Donald Trump has jolted global markets with an earlier-than-expected and stringent implementation of tariffs on China, Canada and Mexico.
Among the impacts are a slowdown in global economic growth, a spike in oil prices, higher prices for U.S. consumers, and higher-for-longer U.S. interest rates, with a stronger U.S. dollar as a result.
Outside of the U.S., autos, chips and consumer goods firms, along with Chinese e-retailers are all being impacted.

U.S. President Donald Trump this weekend announced hefty tariffs on his country’s three biggest trading partners, leaving investors scrambling to position themselves for a global trade war.
Canada and Mexico face 25% duties on their exports to the U.S., with a lower 10% levy imposed on Chinese goods. Canada has already responded with retaliatory tariffs of 25% against $155 billion of U.S. goods.

Trump has, meanwhile, stated that the European Union will be next in the firing line, with the U.K. also under consideration.
Though Trump repeatedly threatened tariffs on the campaign trail, Deutsche Bank analyst Jim Reid said in a Monday note that the market had been “completely under-pricing the risks” and would now be in “severe shock.”
Among the expected short- to medium-term impacts are a slowdown in global economic growth, particularly in countries with large manufacturing sectors, a spike in oil prices, higher prices for U.S. consumers and higher-for-longer U.S. interest rates, with a stronger U.S. dollar as a result.

Trump tariffs could create a new challenge for Chinese policymakers: A growth rate below 5%

Outside of the U.S. and the three other economies directly involved, sectors around the world are braced for impact from the tariffs.
Here are some of the areas expected to be hit:

Automotives

Autos firms — from car brands to the makers of vehicle parts — are expected to be among the worst affected by escalating trade tensions as they represent a major area of international imports into the U.S.
Germany’s Volkswagen, for example, owns Mexico’s biggest car factory where it produces vehicles for export to the U.S. Analysis by RBC Capital Markets estimates the company could see a 9% cut to its earnings as a result of tariffs in a worst-case scenario, while Stellantis — which owns Chrysler and Jeep — also has major operations in Mexico, including the production of Ram pickup trucks, and see a 12% hit to earnings.
The effects on stocks were immediate on Monday, with European automakers on the regional Stoxx 600 index plunging 3.4%, and part suppliers including Valeo and Forvia also tumbling on expectations of a sector slowdown.

Auto stocks plunge as Trump tariffs spark trade war concerns

Chip firms

Makers of chips and semiconductor equipment, ranging from Taiwan’s TSMC to the Netherlands’ ASML, are braced for a tariff impact given the industry’s global supply chains — including factories in Mexico and China — and because of a potential slowdown in demand.
Taiwan Semiconductor Manufacturing Co, the world’s largest chipmaker, specializes in making semiconductors for other companies, such as U.S. firms Apple, Nvidia, AMD, Qualcomm and Intel.
ASML, meanwhile, manufactures the extreme ultraviolet lithography (EUV) machines used by many global chipmakers to print intricate designs on chips. ASML ships these tools to multiple countries, including the U.S., Taiwan and South Korea.

“The latest moves won’t do much to calm the high tensions which have hit the semiconductor sector,” Susannah Streeter, head of money and markets at Hargreaves Lansdown, said Monday.
“Companies like Nvidia rely on the production of chips from outsourced factories overseas, like China and Mexico – but many other parts needed to construct AI data centers could also be vulnerable to tariffs, given they are imported.”

Consumer goods

For the U.S. consumer, a host of household and leisure goods made overseas could be set for price increases, from furniture and electrical appliances to clothing, video consoles, phones and toys.
Elsewhere, there will be an impact on U.S.-exported products sent to countries such as Canada which retaliate with tariffs — as well as on consumer goods firms around the world that send products across the U.S.’ borders.

Trump tariffs could raise prices on technology like laptops, smartphones and AI

One example is drinks giant Diageo, which has already been struggling with weakening demand in North America.
Fintan Ryan, consumer equity research analyst at Goodbody, told CNBC that tariffs were one of the biggest challenges for the company this year as the U.S. accounts for roughly 45% of the company’s operating profit.
Around 70% of its sales in the U.S. are imports, meanwhile, including Canadian whiskey, Mexican Tequila, Scotch, and Baileys and Guinness from EU member Ireland. Diageo is due to report earnings on Tuesday.

Chinese e-retailers

Chinese companies face the highest risk from tariffs and other changes to U.S. market access, according to analysis by Morgan Stanley. Of those, hugely popular China-linked online shopping platforms such as Temu, Shein and AliExpress are set to be hard hit.
This is because Trump has halted a trade exemption known as “de minimis,” which had allowed exporters to ship packages worth less than $800 into the U.S. duty-free.
U.S. officials have claimed the exemption allowed Chinese e-commerce companies to undercut their competitors and flagged safety concerns due to their “minimal documentation and inspection.”
The U.S. processed more than 1.3 billion de minimis shipments in 2024, according to data from the U.S. Customs and Border Protection agency.
Without the exemption, high-volume, low-cost products from China’s online retailers will face duties, potentially pushing up the end price of the items and causing a fall in demand.
— CNBC’s Ganesh Rao, Michael Bloom, Annie Palmer and Ryan Browne contributed to this story. More

Inflation in the euro zone unexpectedly rose to 2.5% according to flash data from statistics agency Eurostat.
A Reuters poll of economist had forecast the print to come in at 2.4%, unchanged from December.
Energy costs accelerated sharply, jumping 1.8% from a year earlier in January compared to a 0.1% rise in the previous month.

A person buys products at a Mercadona store in Lisbon, Portugal, on January 25, 2025.
Luis Boza | Nurphoto | Getty Images

The euro zone inflation accelerated to a hotter-than-expected 2.5% in January on an annual basis as energy costs jumped, flash data from statistics agency Eurostat showed Monday.
Economists polled by Reuters had expected the January inflation print to come in at 2.4%, unchanged from December.

So-called core inflation, which strips out food, energy, alcohol and tobacco prices, came in at 2.7% in January and has remained unchanged since September. The closely watched services inflation print meanwhile inched lower to 3.9% in January from 4% in December.
Energy costs however jumped, rising 1.8% from a year earlier. This was up sharply from December’s 0.1% increase.
Both energy prices and core inflation came in higher than anticipated, while the dip in services inflation was smaller than hoped for, Jack Allen-Reynolds, deputy chief euro zone economist at Capital Economics said in a note on Monday.
“Services inflation has been stuck around 4% for over a year,” he pointed out, noting that it was difficult to predict when it would ease.
Headline inflation in the euro zone hit a low of 1.7% in September, but has since re-accelerated as base effects from lower energy prices have faded. The European Central Bank last week said disinflation “is well on track.”

“Inflation has continued to develop broadly in line with the staff projections and is set to return to the Governing Council’s 2% medium-term target in the course of this year,” the bank added. “Most measures of underlying inflation suggest that inflation will settle at around the target on a sustained basis.”
The ECB on Thursday cut interest rates by 25 basis points, bringing the key deposit facility rate to 2.75%. Further rate reductions are expected from the ECB throughout the year.
Capital Economics’ Allen-Reynolds said that the latest inflation data “won’t change ECB policymakers’ minds about the likely near-term path for interest rates.”
“The fact that services inflation remained high will mean that they will prefer to loosen policy in small steps,” he said.
Inflation is likely to reach close to the 2% ECB target by the summer and could even fall lower later in the year, Allen-Reynolds estimated. He added that the net effect of potential tariffs imposed on goods imported to the U.S. from the EU — along with possible retaliatory duties from the European Commission — will likely be small.
Bert Colijn, Netherlands chief economist at ING expressed more caution about the impact of such tariffs.
“Retaliatory tariffs would add to inflation again as tariffs usually result in higher consumer prices,” he said Monday, adding that this meant inflationary risks “have far from fully abated.”
“With inflationary risks still prevalent and uncertainty increasing, the question is how low the ECB can push rates to give the economy more breathing room,” Colijn said.
The Monday data comes after several key euro zone economies, including France and Germany, last week reported their latest consumer price index data. The annual rate hit 1.8% in France and 2.8% in Germany, according to preliminary data from the country’s statistics agencies. The figures are harmonized across the euro zone for comparability.  More