China Hits Back with Tariffs as U.S. Trade War Escalates

China has imposed retaliatory tariffs on U.S. imports in response to new U.S. duties on Chinese goods, reigniting tensions between the world’s two largest economies. The move follows President Donald Trump’s decision to enforce an additional 10% tariff on all Chinese imports into the U.S., which took effect at 12:01 a.m. ET on Tuesday (0501 GMT).

Beijing swiftly responded with its own set of tariffs, set to take effect on February 10, targeting American-made cars, farm equipment, and energy exports. The renewed trade dispute comes as Trump seeks to penalize China over the continued flow of illicit drugs into the U.S.

Meanwhile, Trump temporarily suspended his threat of imposing 25% tariffs on Mexico and Canada, granting a 30-day pause in exchange for concessions on border security and crime enforcement. Despite this reprieve, the Canadian dollar and Mexican peso weakened on Tuesday, while the U.S. dollar gained strength following the fresh tariffs on China. The Chinese yuan and Australian dollar also took a hit, and the euro declined as the European Union remained under Washington’s trade scrutiny.

The latest developments have reignited fears of a prolonged global trade war, dampening optimism that had briefly surfaced after Trump’s last-minute negotiations with Canada and Mexico.