Trump Trade War Diary — Day 15

trade-wars

trump-trade-war-diary

China slaps 15% tariffs on US coal and LNG moments after Trump’s new tariffs come into effect.

Published

February 4, 2025

China response

China slaps 15% tariffs on US coal and LNG moments after Trump’s new tariffs come into effect. It also launches an antitrust investigation into Goolge

So, after all is done and dusted, US impsed an extra 10% tariff on China. It includes closing a “de minimis” loophole for small packages which was exploited by Chinese fashion giants Shein and Temu. It is 430 bln USD of US imports.

What are effects? With 5% tariff elasticity, it is 40% reduction in trade from China to US which will reduce collection of tariffs by (0.1+0.19)(1-exp(0.1))430-0.19*430=6.88 bln USD

Financial TImes adds

The Chinese government has announced several retaliatory measures against the US following Donald Trump’s imposition of new tariffs:

New tariffs on US imports:

10-15% tariffs on US LNG, coal, crude oil, and farm equipment
Additional tariffs on some US car exports
Set to take effect February 10

Other retaliatory measures:

Launched an antitrust investigation into Google
Imposed export controls on tungsten and other rare metal products
Added PVH Group (owner of Calvin Klein and Tommy Hilfiger) and Illumina to China’s “unreliable entity list”

The situation developed after Trump implemented an additional 10% tariff on Chinese imports, citing concerns about immigration and fentanyl flows. While Trump had also announced tariffs on Canada and Mexico, these were delayed for a month following last-minute discussions with their leaders.

Market reactions included: - Hong Kong’s Hang Seng index reduced gains to 2.3% - The offshore renminbi weakened 0.1% against the dollar - Oil and natural gas prices fell

While Trump and Xi Jinping are expected to speak in the coming days, economists remain skeptical about the likelihood of reaching an agreement to ease trade tensions.

EU-UK relationships

UK Prime Minister Keir Starmer addressed the European Council of EU leaders in Brussels - the first UK PM to do so since Brexit - calling for renewed engagement between the UK and EU.
Starmer proposed a new defense and security pact as the centerpiece of a “reset” relationship with the EU, emphasizing areas like military logistics, procurement, and protection of subsea cables.
The PM stated he won’t “choose” between closer relations with Brussels or Washington, though this position may be tested if Trump implements threatened tariffs against the EU.
The meeting took place at the Palais d’Egmont in Brussels, symbolically significant as it’s where the UK signed its treaty to join the European Economic Community in 1972.
EU officials responded positively, with European Council President António Costa calling the UK a “natural partner” and noting “new positive energy” in the relationship.
Key negotiation points for closer UK-EU ties include:
- EU demands for continued access to British fishing waters
- A proposed youth mobility scheme for EU nationals under 30
- Potential removal of barriers to food product trade
- Possible linking of UK-EU carbon emissions markets
- Resolution of Gibraltar’s post-Brexit status
Recent polling shows 55% of British people believe Brexit was wrong, with only 11% viewing it as more of a success than a failure.
A full EU-UK summit is expected in April or May to advance discussions, with both sides showing interest in healing post-Brexit divisions, particularly given concerns about Trump’s stance toward transatlantic allies.

link

--- title: "Trump Trade War Diary — Day 15" description: "China slaps 15% tariffs on US coal and LNG moments after Trump's new tariffs come into effect." date: "2025-02-04" categories: [trade-wars, trump-trade-war-diary] --- # China response China slaps 15% tariffs on US coal and LNG moments after Trump's new tariffs come into effect. It also launches an antitrust investigation into Goolge So, after all is done and dusted, US impsed an extra 10% tariff on China. It includes closing a "de minimis" loophole for small packages which was exploited by Chinese fashion giants Shein and Temu. It is 430 bln USD of US imports. What are effects? With 5% tariff elasticity, it is 40% reduction in trade from China to US which will reduce collection of tariffs by (0.1+0.19)*(1-exp(0.1))*430-0.19*430=6.88 bln USD Financial TImes [adds](https://www.ft.com/content/5653e2d6-2316-4316-9a7c-72cf4f7d86e5) The Chinese government has announced several retaliatory measures against the US following Donald Trump's imposition of new tariffs: 1. New tariffs on US imports: - 10-15% tariffs on US LNG, coal, crude oil, and farm equipment - Additional tariffs on some US car exports - Set to take effect February 10 2. Other retaliatory measures: - Launched an antitrust investigation into Google - Imposed export controls on tungsten and other rare metal products - Added PVH Group (owner of Calvin Klein and Tommy Hilfiger) and Illumina to China's "unreliable entity list" The situation developed after Trump implemented an additional 10% tariff on Chinese imports, citing concerns about immigration and fentanyl flows. While Trump had also announced tariffs on Canada and Mexico, these were delayed for a month following last-minute discussions with their leaders. Market reactions included: - Hong Kong's Hang Seng index reduced gains to 2.3% - The offshore renminbi weakened 0.1% against the dollar - Oil and natural gas prices fell While Trump and Xi Jinping are expected to speak in the coming days, economists remain skeptical about the likelihood of reaching an agreement to ease trade tensions. ## EU-UK relationships * UK Prime Minister Keir Starmer addressed the European Council of EU leaders in Brussels - the first UK PM to do so since Brexit - calling for renewed engagement between the UK and EU. * Starmer proposed a new defense and security pact as the centerpiece of a "reset" relationship with the EU, emphasizing areas like military logistics, procurement, and protection of subsea cables. * The PM stated he won't "choose" between closer relations with Brussels or Washington, though this position may be tested if Trump implements threatened tariffs against the EU. * The meeting took place at the Palais d'Egmont in Brussels, symbolically significant as it's where the UK signed its treaty to join the European Economic Community in 1972. * EU officials responded positively, with European Council President António Costa calling the UK a "natural partner" and noting "new positive energy" in the relationship. * Key negotiation points for closer UK-EU ties include: - EU demands for continued access to British fishing waters - A proposed youth mobility scheme for EU nationals under 30 - Potential removal of barriers to food product trade - Possible linking of UK-EU carbon emissions markets - Resolution of Gibraltar's post-Brexit status * Recent polling shows 55% of British people believe Brexit was wrong, with only 11% viewing it as more of a success than a failure. * A full EU-UK summit is expected in April or May to advance discussions, with both sides showing interest in healing post-Brexit divisions, particularly given concerns about Trump's stance toward transatlantic allies. [link](https://www.ft.com/content/9b124ec8-93c3-452d-954b-0e7b7fe5d434)