President Donald Trump has been threatening increased tariffs on China for months and now he says he’s delivering it.
Trump has said nothing can delay these tariffs, and for China that means an extra 10% slapped on to the cost of its exports.
For China’s government, this is all part of the great game of handling the new US president.
However, the game is increasingly complicated and fraught. Trump previously spoke on the phone to China’s President Xi Jinping – they discussed trade, TikTok, and fentanyl. Fentanyl has fuelled the US opioid drug crisis.
Chinese companies export chemical precursors that are used by Mexican cartels to make fentanyl. This has outraged Trump.
China has restricted some of these chemicals, but its pharmaceutical industry is massive and it is not difficult to modify the chemicals and circumvent government restrictions.
Under the previous Biden administration, there was increased cooperation between both countries on the fentanyl problem.
Trump clearly believes it has not achieved enough and is applying pressure on China, through tariffs, to do more.
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It is uncertain how China will respond. Beijing says it should not be blamed for US drug addiction.
On the issue of trade, China says it is against protectionism and wants a “win-win solution”.
It rarely expands on what that means but at the World Economic Forum in Davos a government official said the country wants to expand its import of high-quality products. China’s trade surplus hit almost $1trn (£810bn) last year.
For now, China has side-stepped the 25% hitting Canada and Mexico.
Some analysts are suggesting there could be a grand deal between the US and China in the works.
But as the rivalry between the countries over artificial intelligence dominance heats up, the stakes grow higher and negotiation more challenging.
This week, the release of the new Chinese App DeepSeek was a wake-up call and a watershed moment for the world.
The US is alarmed. China is taking it all in its stride.
