China Retaliates With Tariffs as U.S.-China Trade War Escalates; Stocks to Watch

China has announced a new round of retaliatory tariffs on U.S. goods, intensifying trade tensions following President Donald Trump’s decision to impose sweeping duties on Chinese imports. Beijing’s countermeasures include a 15 percent tariff on U.S. coal and liquefied natural gas (LNG) and a 10 percent tariff on crude oil, agricultural machinery, pickup trucks, and select electric vehicles. These tariffs, set to take effect on February 10, come as both countries prepare for high-level talks between Trump and Chinese President Xi Jinping in an attempt to de-escalate the conflict.

U.S. Tariffs on China and Beijing’s Response

Over the weekend, Trump moved forward with his long-promised tariffs on China, enacting a 10 percent duty on all Chinese imports. In response, China’s Ministry of Commerce condemned the move, calling it a violation of World Trade Organization rules and warning that Beijing would take all necessary countermeasures.

In addition to the tariffs, China has reignited antitrust investigations into major U.S. technology firms, including Google and Nvidia, while considering a new probe into Intel. The investigation into Google focuses on the dominance of its Android operating system and its impact on Chinese smartphone manufacturers such as Oppo and Xiaomi. Nvidia, the world’s largest AI chipmaker, is also under scrutiny for its past commitments related to the Mellanox acquisition. Intel, whose China revenue accounts for nearly 30 percent of its total sales, now faces the possibility of similar regulatory action.

Sectors and Companies Affected

The new tariffs and investigations are expected to have broad economic implications, particularly in the energy, technology, and retail sectors.

- Energy: The 15 percent tariffs on U.S. coal and LNG (impacting stocks like USO, XLE, LNG, and GLNG) could reduce American energy exports to China, one of the world’s largest consumers. Crude oil exporters may also feel the impact as China diversifies its energy imports away from the U.S.

- Technology: The antitrust probes into Google (GOOGL), Nvidia (NVDA), and potentially Intel (INTC) raise regulatory risks for American semiconductor and tech firms, which heavily rely on China for revenue. Apple (AAPL), AMD (AMD), and TSMC (TSM) may also face indirect pressures if China tightens restrictions on foreign chipmakers.

- Automotive: The 10 percent tariff on electric vehicles could affect Tesla (TSLA) and other U.S. automakers that rely on Chinese demand. This could have implications for Rivian (RIVN) and Lucid Motors (LCID), though their China exposure is limited compared to Tesla.

- Retail and Consumer Goods: The trade war’s escalation may impact companies with significant supply chain exposure to China, including Walmart (WMT), Target (TGT), Amazon (AMZN), and fashion brands like PVH (Calvin Klein’s parent company).

Market Reaction and Investor Sentiment

Despite escalating trade tensions, Chinese stocks opened strongly following the Lunar New Year holiday, with major indices rebounding on optimism that negotiations between Trump and Xi may ease some uncertainty. The FXI China ETF rose 1.65 percent, while the KWEB China internet ETF gained 2.15 percent. Leading Chinese stocks also advanced, with Alibaba (BABA) up 1.6 percent, JD.com (JD) climbing 3.9 percent, and Bilibili (BILI) surging 5.5 percent.

The broader global markets, however, remained cautious. Crude oil prices fell as concerns over declining U.S. energy exports to China weighed on sentiment. The U.S. dollar strengthened, while the Chinese yuan, euro, Australian dollar, and Mexican peso all declined, reflecting growing fears of a prolonged trade standoff.

Diplomatic Talks and Path Forward

White House press secretary Karoline Leavitt confirmed that Trump and Xi are expected to speak within the next 24 hours, marking a critical moment in trade negotiations. While no formal resolution is expected immediately, the call could set the stage for more extensive diplomatic efforts in the coming weeks.

Trump has signaled a willingness to impose additional tariffs if a deal cannot be reached, suggesting that the U.S. may escalate its trade measures further. Meanwhile, China has warned that it will challenge the new tariffs at the World Trade Organization while keeping the door open for further dialogue.

Beyond tariffs, the broader U.S.-China relationship remains tense, with China’s UN envoy emphasizing the need for cooperation in areas like artificial intelligence and economic policy. The European Union is also watching developments closely, with trade officials signaling a desire to engage in early discussions with the U.S. to prevent any spillover effects from the U.S.-China dispute.

Conclusion

China’s latest retaliatory tariffs and regulatory actions mark a new phase in the U.S.-China trade conflict, adding pressure to key industries while increasing uncertainty for investors. With both nations deeply entrenched in economic disputes, the next few days will be critical as Trump and Xi attempt to navigate the escalating tensions.

Markets remain on edge, with energy stocks facing headwinds and tech firms bracing for regulatory scrutiny in China. As the situation unfolds, investors will be closely monitoring upcoming diplomatic engagements and potential shifts in trade policy that could influence the trajectory of global markets.