• US stock futures and Asian markets rose after Trump's commerce secretary hinted at some tariff compromises.
• Trump reimposed 25% tariffs on Canada and Mexico after pausing the plan for a month.
• Markets closed lower for a second consecutive day as the Nasdaq and S&P 500 saw significant declines.

US stock futures ticked up on Tuesday night, indicating a pickup after sharp falls during the day.

The futures market rallied after Commerce Secretary Howard Lutnick's comments on Fox Business that President Donald Trump could announce tariff compromises with Canada and Mexico as early as Wednesday.

S&P 500 futures were 0.6% higher at 01:25 a.m. ET on Wednesday, while futures tied to the Dow Jones Industrial Average rose 0.5%. Nasdaq 100 futures were up 0.7%.

Trump reimposed 25% tariffs on imports from Canada and Mexico, a plan that was paused for a month and then came into effect early Tuesday morning. The tariffs were imposed because Trump thinks the neighboring countries are failing to stem the flow of drugs and crime into the US.

Lutnick's remarks came after US markets staggered and closed lower for a second consecutive day. The Nasdaq composite slipped 0.4%. During the day, it briefly reached a 10% decline from its most recent closing high. The S&P 500 fell 1.2%, wiping out all post-election gains since last November.

Lutnick said talks with Canada would likely reduce some of the newly reimposed tariffs on imports from the two neighboring countries.

"Both the Mexicans and the Canadians are on the phone with me all day today, trying to show that they'll do better," Lutnick said, adding that Trump is "listening" and open to a middle-ground solution.

Canada swiftly responded with 25% of retaliatory tariffs. Canadian Premier Doug Ford announced Tuesday that he would cancel a $100 million deal with Starlink and remove US alcohol from shelves. He also threatened a 25% surcharge on electricity that Ontario sends to 1.5 million Americans.

Meanwhile, Mexican President Claudia Sheinbaum said retaliatory measures are "going to wait" because she planned to speak to Trump this week.

While details of Trump's compromise remain unclear, Lutnick said it would likely not be another tariff pause, but a more long-term deal.

Trump spoke at length about tariffs during Tuesday's joint address to Congress.

"Countless other nations charge us tremendously higher tariffs than we charge them. It's very unfair," he said.

China signals confidence with GDP growth target at 5%

Despite the difficult trading day on Tuesday stateside, Asian markets were broadly higher on Wednesday.

The bump came after Chinese Premier Li Qiang signaled confidence in his country's economy even amid heightened trade tensions with the US.

On Tuesday, China announced a GDP growth target of "around 5%" in a government work report delivered by Li at the National People's Congress in Beijing.

China is also raising its fiscal deficit to 4% of GDP, from 3% the year before.

"Internationally, changes unseen in a century are unfolding across the world at a faster pace," Li said in his speech at the opening of the congress.

Analysts say the economic work plan is largely in line with market expectations.

"Repeating the 'around 5%' growth target, despite a more challenging external environment is, in our view, a show of confidence and a harbinger of stronger policy support for domestic demand," wrote Lynn Song, ING's chief economist for Greater China, in a Tuesday note.

Hong Kong's Hang Seng Index closed 2.8% higher while mainland China's CSI 300 closed 0.3% up. The Hang Seng Tech Index gained 4% as Li also pledged support for the tech industry.

Japan's Nikkei 225 ended 0.2% higher and South Korea's Kospi index closed 1.2% up.

'Buckle up'

Trump is likely just getting started with the trade action.

"I am confident that the bulk of the tariff developments still lie ahead. I think what we've seen so far is really just the beginning and I think the President is just getting started at this point," Jeff Gerrish, the Deputy US Trade Representative during Trump's first term, said on a Goldman Sachs podcast uploaded on Tuesday.

Gerrish said he will monitor the Trump-ordered US trade policy review. The reports from the review, which are expected on April 1, could lead to "a whole host of tariff actions," Gerrish said.

On Tuesday, Trump acknowledged in his presidential address that tariffs could be disruptive.

"Tariffs are about making America rich again and making America great again. And it's happening, and it will happen rather quickly," Trump said. "There'll be a little disturbance, but we're OK with that. It won't be much."

On the same day, new US tariffs against imports from Canada, China, and Mexico took effect. Canada and China announced retaliatory tariffs in response.

Economists have warned that additional costs from the US tariffs would likely be passed on to American consumers rather than to foreign exporters.

• China retaliated with tariffs on American goods after Donald Trump doubled levies on Chinese goods.
• Canada also announced 25% retaliatory tariffs on US goods.
• Canada's Trudeau said that Americans will pay more for gas and groceries as a result.

Canada and China swiftly retaliated against new tariffs from the Trump administration on Tuesday.

After President Donald Trump doubled tariffs on Chinese goods from 10% to 20%, Beijing announced additional tariffs of 10% to 15% on some US imports starting March 10.

Canada also was prepared for a quick response; the country's prime minister, Justin Trudeau, released a statement on March 3 saying that if Trump's tariffs go into effect, Canada will place a 25% tariff on $155 billion of American goods until Trump's tariffs are withdrawn.

"Because of the tariffs imposed by the U.S., Americans will pay more for groceries, gas, and cars, and potentially lose thousands of jobs," Trudeau said. "Tariffs will disrupt an incredibly successful trading relationship. They will violate the very trade agreement that was negotiated by President Trump in his last term."

The retaliatory tariffs mark a new trade war under the Trump administration; Trump has vowed that his tariffs will remain in place until the countries he is targeting crack down on their drug and border policy, specifically surrounding the flow of fentanyl into the US.

"While President Trump gave both Canada and Mexico ample opportunity to curb the dangerous cartel activity and influx of lethal drugs flowing into our country, they have failed to adequately address the situation," the White House's fact sheet said.

Mexico's President, Claudia Sheinbaum, said on Tuesday there was no justification for the US move and that would announce "tariff and non-tariff measures" on Sunday. Mexico was also hit with a 25% tariff from Trump.

The impact of Canada and China's retaliatory tariffs

China's retaliatory tariffs include 10% tariffs on US soybeans, pork, and beef imports and 15% tariffs on chicken and cotton imports, according to the Commerce Ministry.

Beijing also targeted American farm imports into China when US President Donald Trump started the trade war in his first term.

Trudeau's statement did not outline specific goods Canada's tariffs are targeting. However, Trudeau said in early February, following Trump's initial tariff announcement, that Canada's tariffs will impact a range of goods shipped from the US to Canada, including fruit, clothing, shows, and household appliances.

Beijing's speedy response on Tuesday — reminiscent of Beijing's swift response on February 4 against the US's first tranche of tariffs — is an indication that Xi Jinping's administration was prepared for the moves.

Markets in Asia were broadly lower early on Tuesday because of worries over the impact of the trade war. But losses were limited as investors were already prepared, analysts said.

China's measures also appeared contained, Gary Ng, a senior economist at Natixis, told Business Insider. He said Beijing stuck to its "playbook of retaliation," similar to the moves it used on February 4. Last month, the country announced tariffs on some US goods and imposed export controls and market access restrictions on select companies.

Some US companies are already preparing for price increases in response to the latest tariffs. Target CEO Brian Cornell told CNBC on Tuesday that the tariffs could lead the company to raise prices on fruits and vegetables.

"Those are categories where we'll try to protect pricing, but the consumer will likely see price increases over the next couple of days," Cornell said, adding: "If there's a 25% tariff, those prices will go up."

DeepSeek confidence is buoying China

China's markets have recently been supported by renewed interest in its tech stocks following DeepSeek's meteoric rise.

At a press briefing on Monday, Scott Kennedy, a China specialist at the Center for Strategic and International Studies, said China felt it was in a "much better position" than during Trump's first term in office. Because of significant tech advances, Beijing is not "desperate" for a Trump deal, he said.

"If they're going to reach a deal, they want it to benefit China and not just be a one-way list of concessions from Beijing to Washington," Kennedy said.

Trump is doubling down on tariffs just as Beijing holds its annual political meetings of the National People's Congress and the Chinese People's Political Consultative Conference known as "Two Sessions."

Investors are watching for signs that China will step up stimulus measures amid heightened trade tensions, a prolonged economic downturn at home, and weak domestic consumption.

Chinese Premier Li Qiang is expected on Wednesday to deliver the government work report that's set to detail top policy priorities and reveal China's 2025 GDP growth target.

• Trump's tariffs on Canada, Mexico, and China are now in effect.
• The Trump administration is imposing a 25% tariff on imports from Canada and Mexico.
• Trump doubled the US's additional tariffs on China from 10% to 20%.

President Donald Trump's new tariffs on Mexico, Canada, and China are here.

Tariffs of 25% on imports from Canada and Mexico went into effect on Tuesday. Energy imports from Canada are subject to a lower 10% tariff.

Trump had initially announced tariffs on both countries in early February, but he reached a deal with the leaders of Mexico and Canada to delay the tariffs by a month.

Also on Tuesday, Trump doubled the tariff on goods from China from 10% to 20% in an effort to push for strengthened drug policy, particularly surrounding the flow of fentanyl into the US.

The president's initial executive order placing tariffs on the three countries said the tariffs would remain in place "until the crisis is alleviated," referring to border and drug policy.

US stocks were little moved in premarket trading, with futures underlying the Dow Jones Industrial Average and S&P 500 almost flat, and Nasdaq 100 futures up 0.2%. The three indexes had closed 1.5%, 1.8%, and 2.6% lower on Monday.

European stocks were broadly in the red as of 4:25 a.m. ET, with Germany's DAX index down 1.8%, France's CAC 40 down 1.1%, and the Euro Stoxx 50 down 1.6%. BMW shares fell 4.1%, Deutsche Bank shares fell 3.6%, and Siemens, Adidas, BASF, and Volkswagen were all down between 2% and 3%.

Responses from China, Mexico, and Canada

Beijing retaliated swiftly against Trump's additional tariffs, announcing that China will impose additional tariffs of 10% to 15% on some US imports starting March 10.

According to the Commerce Ministry, they include 10% tariffs on US soybeans, pork, and beef imports and 15% tariffs on chicken and cotton imports.

US farm imports into China were also targeted by Beijing when Trump started the trade war in his first term.

Beijing is also banning Illumina — a California-based biotech firm — from selling gene sequencing products in China to "safeguard national sovereignty, security and development interests," the country's Commerce Ministry announced separately.

Beijing also added 10 US companies to a list of unreliable entities and imposed dual-use item export controls on 15 US entities.

Canada's prime minister, Justin Trudeau, said in a statement on Monday night that if the White House followed through, his administration would retaliate with 25% tariffs on $155 billion of US goods.

"Canada will not let this unjustified decision go unanswered," he said.

The statement said Ottawa plans to roll out the retaliatory measures over 21 days, with immediate tariffs on an initial $30 billion tranche of US goods. Trudeau added that his government is discussing other "non-tariff measures."

Mexico's president, Claudia Sheinbaum, said on Monday that she would wait to see the scale of the new tariffs before announcing any retaliation.

The US imports a range of key goods from Canada, Mexico, and China, including crude oil, car parts, and electronics. Some companies, like Walmart, have said they will raise prices if tariffs go into effect.

Trump wrote on Truth Social in February that Americans will feel "some pain" with tariffs, but "it will all be worth the price that must be paid."

The White House did not immediately respond to a request for comment.

• Renault's former Russian partner said the carmaker might need to pay $1.3 billion to reenter the market.
• Renault exited Russia in 2022, selling its assets for 1 ruble amid Western sanctions.
• Foreign firms face challenges returning to Russia, with possible compensation demands looming.

Renault exited the Russian market in 2022, selling its assets for a single ruble.

Now, the French carmaker may need to pay 112.5 billion rubles — about $1.3 billion — if it seeks to return after the war, its former Russian partner Avtovaz said. The stipulation is a sign that foreign firms looking to return to the market could face high compensation demands.

In the case of Renault, Maxim Sokolov, the CEO of Avtovaz, said the company and the Russian state had invested 112.5 billion rubles in the business since its exit through 2025.

"It is clear that these investments will have to be reimbursed somehow upon return," Sokolov said, according to the TASS state news agency.

US President Donald Trump has signaled a willingness for the US to reconcile with Moscow, spurring recent discussions about a return of Western businesses — such as Renault — to the market.

In 2022, Renault sold its 67.6% stake in Avtovaz to the Russian state with the option to buy back its assets within six years. The automaker took a 2.2-billion-euro write-down from the exit from the market that was its second largest, after France.

A spokesperson for Renault told Business Insider the company didn't "foresee any change for the short term" regarding a return to business in Russia. The company didn't comment on Sokolov's statements.

David Szakonyi, an associate professor of political science and international affairs at George Washington University, told BI that Sokolov's comments about compensation should be taken seriously, even if Russian officials were also posturing.

The exit of foreign businesses created winners at home in Russia, some of whom picked up assets at fire sale prices.

"Freely allowing foreign companies back in is going to diminish their profit streams and make life a lot more competitive, so if that is going to happen, Russia wants some kind of compensation for liberalizing its market," said Szakonyi, who's a specialist in Russia's political economy.

'Even more confident, even more emboldened'

Sokolov's comments echo others in Russia recently signaling tough negotiations for departed companies that wish to return.

Anton Alikhanov, the Russian industry and trade minister, told reporters on Thursday that Russia was "not waiting for anyone with open arms" and that there would be "a price to pay for past decisions."

Szakonyi said Russia was likely to continue with such "cocky rhetoric" amid its rapprochement with the US.

"It feels that it survived just about the worst the West could throw at it and persevered through that adversity and now comes out even more confident, even more emboldened, to make demands on the West and dictate the terms of both political and economic dealmaking going forward," he added.

Three years into the war in Ukraine, 475 foreign companies have left the Russian market completely, according to the Leave Russia database from the Kyiv School of Economics.

The fast-food giant McDonald's and the coffee chain Starbucks were two high-profile brands that left the market, with their assets bought by Russian businesses. McDonald's rebranded to "Tasty and that's it" and Starbucks became Stars Coffee.

Western companies aren't clamoring to go back to Russia

Even though Russia is a large market, analysts have said recently that businesses are likely to be cautious about returning to the country, even if sanctions are lifted.

Russia's wartime economy is facing problems including high inflation, currency volatility, and sky-high interest rates. President Vladimir Putin's ironclad reign presents concerns about the rule of law and safety.

"While Russia says it's open to doing business again, it didn't actually signal any change of tone or policy," said Szakonyi, who added that much of Moscow's rhetoric was probably aimed at the Trump administration's appetite for dealmaking.

Investors are also likely to remain wary after a wave of corporate nationalization and asset seizures in the past few years that redistributed international company wealth to the Russian state and oligarchs.

Szakonyi said Russia had proven that business property rights protections, investor guarantees, and a hospitable business climate were things of the distant past.

"Without them in place, I see no reason why Western companies would risk again with Russia as such a volatile, unpredictable regime," he said. "It has proven that it doesn't care about property rights and that it talks out of both sides of its mouth and is not trustworthy."

• Alibaba has shifted its focus to artificial general intelligence, or AGI.
• The Chinese tech giant recently reported an 8% rise in quarterly revenue, boosting its stock price.
• Alibaba plans to invest $53 billion in AI and cloud over the next three years as it competes with US tech giants.

Hot stock Alibaba has set its sights beyond AI to focus on artificial general intelligence, or AGI.

"We aim to continue to develop models that extend the boundaries of intelligence," said Eddie Wu, Alibaba's CEO, on Thursday. He called the pursuit of AGI the company's "first and foremost goal."

AGI is AI technology that mimics human intelligence to the point that it can achieve complex cognitive tasks involving logic and reasoning.

US-based companies working toward AGI include OpenAI, Google, Meta, and Microsoft. Masayoshi Son, the CEO of major AI investor SoftBank, said earlier this month that he expects AGI to arrive "much earlier" than his late-2024 forecast of two to three years.

Wu's statement came after Alibaba released blockbuster results on Thursday. For the quarter ending in December, Alibaba posted an 8% rise in revenue to 280.2 billion yuan, or $38.6 billion. Profit rose to 48.9 billion yuan, beating analysts' expectations.

"The pursuit of AGI can contribute immense business value," said Wu, citing studies indicating that AGI — when achieved — could replace or achieve 80% of human capabilities. He said about 50% of global GDP comes from wages for blue- and white-collar work.

"If AGI can be achieved, then that could have a tremendous impact in terms of the restructuring industry around the world. It could have a significant influence on or even replace 50% of global GDP," he said.

Alibaba's AI bet

On Monday, Alibaba announced that it's planning to invest at least 380 billion Chinese yuan, or $53 billion, in cloud computing and AI infrastructure over the next three years.

The company is in a crowded global race for AI supremacy as US tech giants ramp up their AI spending. According to recent earnings reports, the combined capital expenditures of Amazon, Microsoft, Google, and Meta are set to exceed $320 billion in 2025.

Amazon is leading the charge, with over $100 billion earmarked for capital expenditures this year. The vast majority will go toward expanding Amazon Web Services and scaling AI infrastructure, the company said.

However, the dramatic rise of DeepSeek, which released a new cost-competitive AI model last month, has thrown Chinese tech companies into the spotlight and caused investors to question whether massive Big Tech AI investments are justified.

US-listed Alibaba shares are up 70% this year to date, thanks to the boost from DeepSeek and after Alibaba announced that it was working with Apple to incorporate its AI into iPhones in China.

The upswing marks a major turnaround after Beijing's yearslong Big Tech regulatory crackdown, when cofounder Jack Ma's tech empire came under intense scrutiny.

Last week, Chinese leader Xi Jinping met with the country's top tech leaders — including Ma — in a sign that the country's private sector is now back in favor again.

The market is viewing the meeting as a possible end of the crackdown. The Chinese government is seemingly working to revive an economy disrupted by a pandemic, regulatory crackdowns, and a real estate crisis, wrote Deutsche Bank analysts in a note last week following the event.

On Monday, Hong Kong-listed Alibaba shares were 2.5% lower by midday after recent gains and as Asian stocks were broadly pressured by sharp losses in the US markets on Friday.

• Western companies may be considering a return to Russia post-war, but Moscow doesn't appear too keen.
• Foreign firms left Russia due to sanctions over its Ukraine invasion, impacting the economy.
• Russian officials say the country is prioritizing domestic companies over returning Western firms.

Some of the Western companies that left Russia over its war in Ukraine may be tempted to head back when the war ends — but Moscow wants them to know it's is not in a rush to receive them.

"We are not waiting for anyone with open arms. There will be a price to pay for past decisions," Anton Alikhanov, the Russian industry and trade minister, told reporters on Thursday, according to TASS state news agency.

Three years into the war in Ukraine, nearly 475 foreign companies have left the Russian market completely, according to the Leave Russia database from the Kyiv School of Economics. Those that have made a complete exit include McDonald's, Starbucks, Ikea, British energy giant Shell, and Japanese tire maker Bridgestone.

Alikhanov said Russia is prioritizing domestic brands instead of waiting for foreign brands to return.

His comments come as US President Donald Trump has signaled a willingness for the US to reconcile with Moscow, igniting discussions about the return of some departed companies.

"It is a reasonable assumption that some companies will seek to return to Russia following a comprehensive settlement to end the war," Andrew Staples, the principal of GeoPol Asia, a business strategy and geopolitical risk consultancy, told Business Insider.

Denis Manturov, the first deputy prime minister of Russia, echoed the country's emphasis on domestic companies and those from the Eurasian Economic Union — a group of five post-Soviet states— per TASS.

"We will clear for our market the ones of interest for ourselves," Manturov said on Thursday.

Foreign firms are probably not rushing back to Russia either

International companies may not race back, wrote Edward Verona, a former business executive who was based in Moscow in the 1990s and 2000s.

"Taking another chance on Russia might seem appealing to some. After all, memories can be short in the business world," Verona, who is now a nonresident senior fellow at the Atlantic Council's Eurasia Center, wrote on Thursday.

Good deals may not be enough to lure back Western companies still concerned about the safety of non-Russian staff and the rule of law, he said.

"US firms may feel less restrained to return than European firms given the geographical and political distance involved," Staples said.

Even if sanctions were to be lifted, he said it's hard to imagine countries closer to the conflict — such as Poland, the Baltic states, Scandinavia, Germany, France, and the UK — get involved again.

Staples said consumer goods companies and firms operating in less sensitive sectors are more likely to return to the market than those in strategic sectors like energy, tech, banking, finance, aerospace, and defense.

Companies seeking to safeguard their reputations and who left Russia for moral reasons are also unlikely to return in the foreseeable future, wrote Verona, who is a former head of the US-Russia Business Council.

Russia's wartime economy

Even if companies are enticed by the prospect of a return to the Russian market, the fundamental question is whether it's worth the effort.

"Perhaps most importantly, from a business perspective, the outlook for the economy is not great," Staples said, citing challenges including high inflation and a tight monetary policy.

The Russian economy has largely held out from three years of Western sanctions — at least on paper — as its leaders focused on defense manufacturing, ramping up military spending to account for 8% of its GDP in 2025.

The ruble slumped to a two-year low of 113.72 against the dollar in early January as Europe's progressive decoupling with Russian energy opened the way for another tranche of US sanctions. That latest measure, one of the Biden administration's final moves, blocks Russia's third-largest bank from handling many energy-related payments.

Still, a new wave of optimism has since buoyed the ruble to a six-month high, at 88.67 against the dollar on Thursday.

The ruble has strengthened about 14% since Trump took office on January 20.

Meanwhile, some of Russia's firms — even those outside the military — are doing well. Yandex, an internet company that operates one of Russia's largest search engines, posted record annual revenues of $11.22 billion on Thursday, surging 37% year-on-year.

Yandex's net income slumped 78% from 2023, to $129 million, as interest and operating expenses increased. Russia hiked interest rates to 21% last year to try to cool surging inflation.

Yandex split from its Dutch-domiciled ownership in July after a two-year negotiation that ended with local buyers acquiring its Russia-based assets.

But other sectors, such as its agriculture, automotive, and commodity industries, have showed signs of struggle.

In particular, Europe has found new sources of energy to supplant Russia, once its largest energy provider. Energy accounts for about one-fifth of Russia's GDP.

Meanwhile, demand from China is sluggish amid its economic downturn, and Trump is pressing other countries to buy more US energy — more competition for Russia's exports.

"Given this economic assessment and continued political and reputational risk of being in Russia, is it an attractive place for foreign firms? I wouldn't anticipate a 'rush to get back to Russia,'" said Staples.

Business risks in Putin's Russia

Even if the numbers work out, there are political risks associated with operating in Russia where President Vladimir Putin — who is in office for a fifth term — has an ironclad rule.

Eurasia Center's Verona wrote that Russia is far from the same Western-partnered country it was under Boris Yeltsin's 1991 to 1999 leadership.

"It is not even the Russia of the early 2000s, before Vladimir Putin had fully consolidated his grip on power and completed the transition from fledgling democracy to authoritarian regime," Verona added. "After twenty-five years of Putin's rule, the Kremlin now dominates all aspects of Russian life, including the country's business climate."

• Chinese leader Xi Jinping met with the country's top tech leaders, signaling support for the private sector.
• China has cracked down on Big Tech in recent years as it prioritized national security over private sector profit-making priorities.
• Chinese tech shares rallied after Xi acknowledged the importance and contributions of the private sector.

Chinese leader Xi Jinping has signaled that he's ready for business again in a high-profile meeting featuring the country's top tech bosses.

On Monday, Xi presided over a meeting with China's private sector leaders — including a beaming Jack Ma clad in a black Mao suit.

At the meeting, Xi urged the executives to "show their talent" and messaged support for private businesses. His audience included gaming giant Tencent CEO Pony Ma, electric vehicle maker BYD CEO Wang Chuanfu, and Huawei CEO Ren Zhengfei.

"It is necessary to resolutely remove all kinds of obstacles to the equal use of production factors and fair participation in market competition,” Xi said, according to Xinhua state news agency.

Beijing should “continue to promote the fair opening of the competitive field of infrastructure to all kinds of business entities, and continue to make great efforts to solve the problem of difficult and expensive financing for private enterprises,” Xi told the business leaders.

On Tuesday, Chinese tech shares rallied on the positive signal that Beijing recognizes the importance of the private sector's contribution to its challenged economy.

Xi's encouraging stance toward the private sector on Monday is a stark contrast to Beijing's scrutiny of the broader private sector over the last few years. The government has cracked down on private companies across various sectors, including those in online gaming and tutoring.

Hong Kong's Hang Seng Tech Index closed 2.5% higher near a three-year high on Tuesday, bringing gains this year to 26%. The broader Hang Seng Index closed 1.6% higher.

To be sure, Chinese tech shares have already been posting strong gains in the last few weeks following the meteoric rise of startup DeepSeek's latest flagship AI model.

"For the past few years, the Chinese authorities had prioritized national security over private sector profit-making priorities," Tai Wei Lim, a professor of business at Japan's Soka University, told Business Insider.

Meanwhile, e-commerce giant Alibaba closed 3.2% higher in Hong Kong on Jack Ma's seeming return to favor.

In late 2020, he angered Beijing with public criticism of China's financial regulators. An outspoken and high-profile Alibaba cofounder, he largely disappeared from public view after Beijing cracked down on his tech empire. It also cost Ant Group, which he founded, its initial public offering.

Jack Ma's appearance at Xi's meeting with business is particularly striking because it signals that "tech leaders seeking profit-making commercial research and products are welcomed" once again, said Lim, who specializes in the political economy of East Asia.

Xi's appearance 'is all-important'

Xi's personal endorsement of China's tech titans on Monday further boosts sentiment amid intensifying geopolitical rivalry and a trade war with the US in President Donald Trump's second term.

Against this backdrop, the rise of DeepSeek — which triggered an AI-related sell-off on Wall Street last month — highlights the importance of the private sector in China's economic ecosystem, Gary Ng, a senior economist at Natixis, told BI.

DeepSeek's stunning breakthrough is a trigger showing "China cannot compete with the US without equal treatment and regulatory flexibility given to private firms," Ng said.

Despite Xi's personal stamp of approval, analysts say Beijing still needs to do more to support a broad economic recovery.

"The move can boost investors' sentiment as more capital bet on the growth in China's AI ability, but the impact on economic growth will depend on whether there is a real policy change," said Ng, referring to a friendly regulatory environment that provides a level playing field for all companies.

But Xi's personal appearance with private sector business leaders is a big deal on its own and a sign of state support in China's high-context political culture, said Lim.

"Given Xi is the most powerful leader since Mao and he is the designated 'Core Leader,' his personal appearance at the meeting with the tech business leaders — China's version of the 'tech bros' —is all-important," said Lim.

• US President Donald Trump has called for reciprocal tariffs on other countries.
• Trump recently ordered 25% tariffs on steel and aluminum and an added 10% tariff on Chinese goods.
• Economists warn Trump's tariffs may raise inflation and hurt US consumers.

President Donald Trump has called for "reciprocal tariffs" on countries that impose such levies on American goods.

"On trade, I have decided, for purposes of fairness, that I will charge a reciprocal tariff, meaning whatever countries charge the United States of America, we will charge them. No more, no less," Trump said from the Oval Office on Thursday.

He added that other countries have been "charging us vastly more than we charge them, but those days are over."

In similar remarks on Wednesday teasing the tariffs announcement, Trump said the "world has taken advantage of the US for many years."

"If they are charging us 130% and we're charging them nothing, it's not going to stay that way," Trump had said on Monday.

Trump's new directive comes just as Indian Prime Minister Narendra Modi lands in the US on Wednesday for a two-day visit.

Trump has called India a "tariff king" in his first term and has repeatedly complained about the country's levies on imports.

India's average tariff is above 10%, compared to the US's average tariff of 2.3% in 2023.

Since taking office, Trump has been widening his trade war against trading partners.

On Monday, Trump imposed 25% tariffs on all steel and aluminum imports. The tariffs, which are set to take effect on March 12, could contribute to price hikes in construction, cars, and travel.

Earlier this month, Trump also placed a 10% tariff on imports from China. In response, Beijing announced retaliatory tariffs on coal, crude oil, agricultural machinery, and some vehicles.

Shortly after taking office, Trump imposed a 25% tariff on most goods from Canada and Mexico. He later announced that those tariffs would be delayed 30 days after he reached a deal with both countries to strengthen border security.

Economists and analysts are grappling with the impact of Trump's tariffs, which are expected to increase inflation.

John Veroneau, a former deputy US trade representative, said Trump should clarify his trade agenda.

"Tariffs will not increase US manufacturing: technology, rather than trade, has been primarily responsible for the fifty-year decline in manufacturing jobs," wrote Veroneau, who is a partner in the Covington & Burling law firm, in a February 11 post on the Council on Foreign Relations website.

Instead, employment has declined as factories can operate with more machines and fewer people, he added.

"Tariffs hurt American consumers and export-oriented manufacturers who lose sales when US trading partners impose their new tariffs in response," wrote Veroneau.

• The White House announced 25% tariffs on all steel and aluminum imports.
• The US is the world's top steel importer, sourcing mainly from Canada, Mexico, and Brazil.
• Higher tariffs may increase US inflation, affecting industries reliant on these metals.

President Donald Trump on Monday ordered 25% tariffs on all steel and aluminum imports, escalating his trade moves against some of the nation's closest allies.

Trump told reporters on Monday that he would announce "reciprocal tariffs," likely on Tuesday or Wednesday, on countries that have placed tariffs on US goods.

"If they are charging us 130% and we're charging them nothing, it's not going to stay that way," Trump said.

Steel and aluminum were among the first products that Trump targeted during his first term. He imposed tariffs of 25% on steel and 10% on aluminum but later granted some duty-free exemptions for trade partners, including Canada, Mexico, and Brazil.

This time, Trump said he is giving "great consideration" to an exemption for Australia — a country with which the US has a trade surplus.

"We have a surplus with Australia. One of the few. And the reason is they buy a lot of airplanes. They're rather far away and they need lots of airplanes," Trump told reporters in the Oval Office on Monday.

Since companies tend to pass the higher price of tariffs on to their customers, the move could boost prices of construction, cars, and travel.

The US is the world's top importer of steel, which is used in a wide range of industries, from construction to automobile manufacturing.

Canada, Mexico, and Brazil were the US' largest steel and iron suppliers last year by dollar value, Census Bureau data showed.

Ursula von der Leyen, the president of the European Commission, said in a Tuesday statement that tariffs hurt businesses and consumers.

"I deeply regret the US decision to impose tariffs on European steel and aluminum exports," she said. "Unjustified tariffs on the EU will not go unanswered — they will trigger firm and proportionate countermeasures."

Canada and Mexico were also among the top countries for aluminum and bauxite imports. The United Arab Emirates ranked No. 2, based on 2024 Census Bureau data by dollar value. Aluminum is used for aircraft construction, consumer products like cans, and construction, among other industries.

Shortly after taking office, Trump imposed a 25% tariff on most goods from Canada and Mexico. He later announced that those tariffs would be delayed 30 days after he reached a deal with both countries to strengthen border security.

Trump also placed a 10% tariff on imports from China, and China quickly announced retaliatory tariffs on coal, crude oil, agricultural machinery, and some vehicles. The tariffs announced Monday come in addition to the 10% tariffs on other goods, Bloomberg reported.

Charles Johnson, the president of the US Aluminum Association, said in a February 1 statement: "To ensure that American aluminum wins the future, President Trump should exempt the aluminum metal supply needed for American manufacturers, while continuing to take every possible action at the US border against unfairly traded Chinese aluminum."

Steel inflation may damp demand

There are fears that higher US tariffs on imports from key trade partners could drive up inflation in the US — at least in the short term.

"Constructing and ramping up new smelters/mills can take three or more years," Morgan Stanley analysts Carlos De Alba and Justin Ferrer said in a January 29 report. "Hence, any import tariffs applied to metals or mined products are likely to result in higher domestic prices for local buyers of these materials."

However, high steel prices could weigh on demand that has already been sluggish from the second half of 2024 due to US election uncertainty and seasonality, wrote analysts from the research firm CreditSights in a Tuesday note.

Meanwhile, it's unclear how Pittsburgh-based aluminum company Alcoa would restart capacity after scaling back in the US for years, they wrote.

But Trump's tariffs are politically strategic, the analysts wrote. The levies also curb transshipment through Canada and Mexico.

"The steel industry seems to becoming quasi-government-owned," wrote analysts from research firm CreditSights in a Tuesday note, citing the tariffs and the US blocking Nippon Steel from acquiring US Steel.

• Trump said on Sunday that he'd ordered the Treasury to stop producing new pennies.
• Trump, in his post on Truth Social, called the production of pennies "wasteful."
• In 2023, pennies cost taxpayers $86 million, per the US Mint.

President Donald Trump said on Sunday that he ordered Treasury Secretary Scott Bessent to halt the production of new pennies.

"For far too long the United States has minted pennies which literally cost us more than 2 cents. This is so wasteful!" Trump wrote in a Truth Social post.

"Let's rip the waste out of our great nations budget, even if it's a penny at a time," he added.

Trump's announcement comes weeks after Elon Musk's Department of Government Efficiency, or DOGE, criticized the costs of making pennies.

DOGE said in an X post on January 22 that producing pennies "cost US taxpayers over $179 million" in fiscal year 2023. Per the US Mint's 2023 report, pennies cost taxpayers $86 million — pennies and nickels combined cost nearly $179 million.

In 2024, the unit cost of producing and distributing a penny was 3.7 cents — far outweighing its face value, per the Mint.

From 2023 to 2024, the unit cost of pennies jumped by 20.2%, largely due to a rise in raw material prices. While pennies used to be made of pure copper, they are now 97.5% zinc, the Mint said.

Global zinc prices have risen by about 33% over the past five years, while copper prices have risen by about 47%.

For decades, Washington has sporadically talked about axing the penny.

In 2013, then-President Barack Obama said the coin was "a good metaphor for some of the larger problems" of the government.

"Anytime we're spending more money on something that people don't actually use, that's an example of something we should probably change," Obama said at the time.

In 2017, Sen. Mike Enzi of Wyoming and Sen. John McCain of Arizona introduced a bill that would have suspended the production of new pennies for a decade. The bill did not move forward.

• The end of USAID could mean more space for China to expand its global influence.
• The agency "assists US commercial interests," the Congressional Research Service said last month.
• Most of China's global investments come through the Belt and Road Initiative, not through aid.

The abrupt shuttering of the US Agency for International Development — a process the White House put into motion this week — is likely to benefit China on the world stage.

"The chaotic end of USAID will undoubtedly rebound to China's benefit, even if it is unlikely to change Beijing's international development strategy in the short term," Jeremy Chan, a senior analyst on the China and Northeast Asia team at the risk consultancy Eurasia Group, told Business Insider.

If USAID is shuttered, "there may be opportunities for other aid givers like China to exert soft power influence through dispensing aid," said Tai Wei Lim, a professor specializing in the political economy of Northeast Asia at Japan's Soka University.

USAID spent $32.5 billion in fiscal year 2024. Exact figures for China's foreign aid spending aren't fully public, but estimates from Japanese academics put the country's 2022 spend as high as $7.9 billion.

While China is far from the US's clout in terms of aid, the East Asian giant has been trying to expand its influence — politically and economically — beyond its shores, namely through its Belt and Road Initiative, as its economy remains in a long downturn.

Concerns about America's positioning without USAID have come amid intensifying geopolitical rivalry between the world's two largest economies.

On Tuesday, US President Donald Trump's administration slapped a 10% tariff on all Chinese goods — on top of prevailing levies. In response, China announced retaliatory tariffs on targeted US goods, including crude oil and machinery.

An America-shaped hole for China

President Donald Trump and Elon Musk have called USAID wasteful and unaligned with American values. Nearly all USAID staff are set to be put on administrative leave starting Friday at midnight.

Founded at the Cold War's height, USAID has never operated as a purely altruistic agency.

USAID works with "strategically important countries" and "assists US commercial interests" by helping countries develop economically, per a report from the nonpartisan Congressional Research Service last month.

Some US politicians have argued that USAID — or a similar aid program — is essential to matching China's foreign aid and investment efforts.

About half of USAID's 2024 spending went to humanitarian purposes or health and population purposes, such as funding HIV programs.

USAID has long garnered bipartisan support. In 2022, Sen. Marco Rubio — now the secretary of state — asked President Joe Biden to use his coming budget requests for USAID and other government agencies to counter China's "expanding global influence."

Now, politicians from both parties are highlighting the agency's role amid its uncertain future. All US foreign aid accounts for about 1% of the federal budget.

"Our assistance abroad helps fight disease and stop starvation and famine, but it's also a tool to stave off the expansionist reach of authoritarian leaders in China, Russia, and Iran," Democratic Sen. Andy Kim of New Jersey told Bloomberg earlier this week.

"I have felt for a long time that USAID is our way to combat the Belt and Road Initiative, which is China's effort to really gain influence around the world, including Africa and South America in the Western Hemisphere," Republican Sen. Roger Wicker of Mississippi told reporters on Tuesday.

China has been flexing its influence

For more than a decade, China has championed its flagship Belt and Road Initiative infrastructure project, through which Beijing has spent more than $1 trillion on gas pipelines, trains, and other trade and infrastructure projects globally. Much of the financing has been in the form of loans to the countries involved.

China has said BRI programs come with no political strings attached. But critics say China is trying to ensnare developing countries into debt traps — thus boosting Beijing's political leverage over debtor countries.

The China-based Green Finance & Development Center estimates that between 145 and 149 countries — about three-quarters of the world's total nations — are directly involved in BRI projects or have indicated interest in cooperating.

An analysis of 2023 data, the most recent year available, from the Green Finance & Development Center, which is based at China's Fudan University, showed how aid was geographically disbursed.

At the country level in 2023, China invested most heavily through BRI in Indonesia at $7.3 billion, followed by Hungary at $4.5 billion and Peru at $2.9 billion.

In Africa — where nearly every country has received Chinese investments — new roads, railways, and ports have been constructed over the past 10 years, while billions have been invested in energy infrastructure projects to give more residents electricity.

China overtook the US as Africa's largest trading partner in 2009. Africa typically imports electronics, machinery, and manufactured goods from China and exports fuel and metals.

In Asia, China has invested in new ports in Sri Lanka, high-speed rail in Indonesia and Saudi Arabia, and infrastructure projects in Uzbekistan.

In September, China's leader, Xi Jinping, said China would commit more than $50 billion to Africa in financial aid. This was intended to strengthen Beijing's relationships with developing countries amid tensions with the US and other Western nations.

To be sure, China's aid efforts are probably not able to match the gargantuan hole left by USAID in the short term. Beijing has also moved its BRI focus from mega infrastructure deals to what it calls "small and beautiful" projects, analysts told BI.

But Beijing could shift its emphasis increasingly eastward, particularly to Africa and Southeast Asia, Eurasia Group's Chan said.

China is already winning some clout from the abrupt potential shutdown of USAID.

"China looks like the good guy on the international stage simply by doing nothing," Chan said.

"While Beijing's calls for stronger multilateral cooperation, more free trade, and improved global governance at the UN and Davos will do little to actually further multilateral solutions to pressing global issues — such as the conflicts in Gaza and Ukraine, supply chain resilience, or AI governance — China will win points at the US's expense by at least keeping up appearances of being a responsible global stakeholder," he said.

• China retaliated with its own tariffs minutes after the US's tariffs went into effect on Tuesday.
• The quick but measured response suggests that China has been strategic.
• Tariffs on Mexico and Canada were delayed by a month after both countries struck a deal with Trump.

Beijing's announcement of retaliatory tariffs on US goods arrived on Tuesday. The news came fast, but with less punch than expected.

"China's tariffs are relatively measured and not symmetrical in scale, touching only an estimated $20 billion in US exports, compared with the more than $500 billion in Chinese exports that will be affected by US across-the-board tariffs," said Jeremy Chan, a consultant for Eurasia Group.

But analysts told Business Insider that the targeted and calibrated nature of the response doesn't mean Beijing is backing down.

"Clearly this is premeditated," Louise Loo, the lead economist for Greater China at Oxford Economics, told Business Insider.

The "carefully curated lists on specific goods simply imply, in our view, that China is prepared to retaliate as and when, rather than back down on aggressive tariffs from the US," she said.

A calculated and strategic move from Beijing

Trump is dealing with a China that's showing restraint. Beijing has been calculated, strategic, and measured in its response, economists and foreign policy analysts told BI.

"China normally waits until measures are implemented, not when they are announced, to retaliate," said Eurasia Group's Chan. "In this instance, Beijing announced its response within minutes of the 10% tariff hike going into effect, showing that it was prepared."

Trump kicked off his trade war with China back in 2018, imposing tariffs on imports from China, like steel and aluminum. That resulted in a series of tit-for-tat responses between the US and China.

Austin Strange, an associate professor at the University of Hong Kong's department of politics and public administration, told BI that China's quick reaction shouldn't come as a surprise. Leaders have "hindsight from dealing with highly unpredictable policies during Trump's first term," he said.

The specific categories on China's tariff list were no accident.

"The restrictions on China exports of key minerals — iridium, molybdenum, etc. — is meant to retard development of a few strategic industries in the US, including solar panels, sophisticated weapons, and batteries," said Thierry Wizman, a global foreign exchange and rates strategist at Macquarie Group.

China's measured response doesn't mean heavier hits won't come

China's response to Trump's opening move was relatively measured, the analysts who spoke to BI agreed.

Chris Fasciano, the chief market strategist at Commonwealth Financial Network, said China's response seemed "designed to send a message" while not causing "too much damage."

"Through this lens their tariff response seems to be moderate in nature compared to the blanket 10% tariffs implemented by the Trump administration," Fasciano said.

China's tariffs included agricultural machinery, but not agricultural products.

In 2018, China slapped 25% tariffs on US soybeans, beef, pork, wheat, corn, and sorghum imports to retaliate against Trump's tariffs. China imported around $34 billion worth of US agriculture goods in fiscal year 2023.

Ian Ja Chong, an associate professor at the National University of Singapore, told BI that China's "more calibrated" opening move leaves room for "heavier measures later on."

"It suggests that Beijing may be ready to negotiate. Whether what each side offers the other is good enough is another matter altogether," Chong said.

These Trump-term tariffs are also hitting the Chinese economy in the midst of a prolonged downturn, which leaves Beijing with less wiggle room for retaliation.

To be sure, US tariffs on China did not go away when Trump completed his first term in 2021.

Then-President Joe Biden maintained Trump's tariffs and even expanded them. In May, Biden announced tariffs on $18 billion of Chinese goods. Besides targeting steel, aluminum, and medical products, Biden also raised tariffs on Chinese electric vehicles from 25% to 100%.

Against the combative backdrop of strategic geopolitical rivalry, Beijing has to show that it, too, can play the game.

"China has no choice but to be aggressive. The measures can always be reversed anyway, so it makes sense to be aggressive," Macquarie's Wizman said.

• The US Postal Service said it will stop accepting parcels from China and Hong Kong immediately.
• Only parcels are affected as the temporary restriction doesn't apply to letters and flat mail.
• A logistics expert predicted "chaos" in the short term with disruption and cancellations.

The US Postal Service said it is temporarily suspending inbound parcels from China and Hong Kong, in a potential blow to Chinese e-commerce retailers.

In a statement on its website Tuesday evening, the USPS said the suspension would take effect immediately and be in place "until further notice." It does not apply to letters and flat mail.

The suspension comes after President Donald Trump imposed a new 10% tariff on all goods imported from China and ended the de minimis exemption that allowed packages worth less than $800, bound for individual consumers, to avoid tariffs.

Louise Loo, the lead economist for Greater China at Oxford Economics, wrote in a note on Tuesday that the exemption had been "particularly relevant" for Chinese e-commerce retailers — such as Shein and Temu — and that China and Hong Kong accounted for 67% of packages entering the US under the exemption between 2018 and 2021.

PDD, Temu's parent company, was down 6% in premarket trading on the Nasdaq after the USPS announcement.

There were more than 1.36 billion de minimis shipments into the US in the 2024 fiscal year according to the US Customs and Border Protection.

The agency said in a January statement that shipments into the US under the exemption had risen by more than 600% over the past decade.

"This exponential increase has created challenges for CBP's effective enforcement of US trade laws, health and safety requirements, intellectual property rights, and consumer protection rules," the statement added.

'The next couple of days are going to be chaotic'

US consumers can expect chaos with their packages, a trade specialist told Business Insider.

"There'll be disruption, there'll be cancellations, the next couple of days are going to be chaotic," said Ram Ben Tzion, the CEO of Ultra Information Solutions.

Chinese exporters could choose to use companies such as DHL, UPS, and FedEx — but this demand surge could cause freight costs to increase, said Ben Tzion. His company is behind Publican, a digital vetting platform for global trade.

Private freight companies may also start evaluating how they plan to handle inbound packages from China and Hong Kong.

"The suspension is actually sending a very strong message to FedEx, to UPS, to DHL that they also need to consider if they continue taking packages from China," Ben Tzion said.

He advised consumers to wait before carting out any products that are shipped out of China or Hong Kong.

"If you continue buying on Shein, Temu, Alibaba, or Amazon, I strongly suggest that you wait for the next week to see how it plays out, because it's going to be a mess," said Ben Tzion.

USPS declined to elaborate on its statement when contacted by BI.

• Canada and Mexico have secured a 30-day reprieve on tariffs from US President Donald Trump.
• In exchange for a tariff pause, Canada and Mexico agreed to boost border security and curb illegal activities.
• A 10% tariff on Chinese goods was not delayed, prompting China to slap retaliatory tariffs on the US.

US President Donald Trump has just shown the world how the Art of the Deal works.

In a matter of days, Trump threatened three key partners — China, Canada, and Mexico — with tariffs over illegal immigration and fentanyl. The threats paid off for the short term: He got a temporary deal with Canada and Mexico.

"President Trump has started his second term with his tariff guns blazing, and so far it has worked extremely well in achieving his policy goals," Rajiv Biswas, the CEO of Asia-Pacific Economics, a Singapore-based research firm, told Business Insider.

On Saturday, Trump, using the International Emergency Economic Powers Act, imposed a 25% tariff on most goods from Canada and Mexico.

The tariffs were initially set to take effect on Tuesday. But after an early morning stock market downturn on Monday, talks with Canada and Mexico resulted in a 30-day tariff delay.

In exchange for the pause, Mexico agreed to deploy 10,000 National Guard troops to its northern border to curb illegal activities. Canada agreed to a set of initiatives targeting drug trafficking, money laundering, and border security.

"Mexico and Canada have immediately capitulated to the threat of US tariffs and agreed to enforce tougher border security measures, which is what President Trump had clearly requested them to do weeks ago, even prior to his inauguration," Biswas said.

The US is trading off, too

While Trump's deals with Canada and Mexico may have been swift, the tradeoff is ill will toward the US in both countries and uncertainty in the international trade order.

"The trade rules are valuable because they create a predictability and certainty for countries and for companies that do business in North America and in the world," said Edward Alden, a senior fellow at the Council on Fore­­­ign Relations. "And to mess with those rules for no good reason is truly irresponsible."

"He has no evidence to show he is able to use tariffs to achieve significant concessions, economic or otherwise," he added.

Some experts said the agreements could have been achieved without threatening tariffs.

"Using the issues around fentanyl and illegal immigration to justify a trade war is somewhat bizarre," said Romel Mostafa, an assistant professor in economics and public policy at the Ivey Business School in Ontario. "It seems like we put the cart before the horse here, which is we basically went into this tariff imposition and counter-tariffs and then came to the discussion table."

Alden said the agreements are "not in the slightest" a significant concession because the Mexican government has long had an interest in cracking down fentanyl smuggling and better controlling its border. As for Canada, he pointed to data from the US Customs and Border Protection showing that the northern neighbor accounts for 0.2% of US border fentanyl seizures.

"The bigger question is whether potentially we could come back again a month later and there could be other demands coming in," Mostafa said of Trump's actions.

China retaliates

While Canada and Mexico have secured brief reprieves from Trump's tariffs, China hasn't. Blanket tariffs of 10% on Chinese goods took effect at 12:01 a.m. ET on Tuesday.

China hit back swiftly, announcing tariffs on a range of US goods, including coal, liquefied natural gas, crude oil, and agricultural machinery.

"The US's unilateral imposition of tariffs seriously violates the rules of the World Trade Organization," China's Finance Ministry said in its tariffs announcement. "It is not only unhelpful in solving its own problems, but also undermines the normal economic and trade cooperation between China and the US."

China has said fentanyl is the US' own problem and that Beijing would challenge the tariffs at the World Trade Organization.

"The US needs to view and solve its own fentanyl issue in an objective and rational way instead of threatening other countries with arbitrary tariff hikes," a Chinese foreign ministry spokesperson said on Sunday.

Trump is taking the same brinkmanship approach to China, said Alex Capri, an international trade specialist and a senior lecturer at the National University of Singapore's business school.

"Trump will take the same approach to China and I think Beijing will, in fact, welcome this transactional way of doing business," Capri said.

• China has imposed tariffs on some US goods in response to Trump's trade plan.
• Chinese authorities also announced a probe into Google and put two companies on its "unreliable entities list."
• Experts warn US tariffs on China may raise prices for electronics and other goods.

China hit back at President Donald Trump's trade plan on Tuesday morning with two tiers of tariffs on American goods.

China's Ministry of Finance said it would impose a 15% tariff on coal and liquefied natural gas and a 10% tariff on crude oil, agricultural machinery, and some vehicles.

The announcement comes days after Trump said he would put a 10% tariff on all Chinese imported products, building on his campaign promise of a robust tariff policy.

In a statement announcing China's tariffs, the Ministry of Finance said the US' moves violate World Trade Organization rules.

"It is not only unhelpful in solving its own problems, but also disrupts the normal economic and trade cooperation between China and the US," the statement said. The tariffs will go into effect on February 10.

Chinese authorities also announced a probe into Google and put PVH Corp — the holding company for Calvin Klein — and Illumina, a US biotech firm, on its "unreliable entities list."

The State Administration for Market Regulation said in its announcement that Google violated antitrust laws. The regulator did not provide further details.

Meanwhile, China's commerce ministry said PVH and Illumina took "discriminatory measures against Chinese companies" and "seriously damaged" the legitimate rights and interests of Chinese firms.

None of the companies immediately responded to a request for comment from Business Insider.

Separately, China's Commerce Ministry and its customs administration announced export controls on strategic metals and minerals, including tungsten-related materials and bismuth-related materials, to "safeguard national security interests."

The US needs to 'solve its own fentanyl issue'

Trump has said his tariffs are a mechanism to hold China, Mexico, and Canada accountable for what he views as their role in the illegal flow of fentanyl into the US.

The president said China is "sending fentanyl to Mexico and Canada" and worsening the fentanyl crisis in the US. He suggested a 60% tariff on China on the 2024 campaign trail.

China has said fentanyl is the US' own problem and that Beijing would challenge the tariffs at the World Trade Organization.

"The US needs to view and solve its own fentanyl issue in an objective and rational way instead of threatening other countries with arbitrary tariff hikes," a Chinese foreign ministry spokesperson said on Sunday.

Vishnu Varathan, Mizuho's head of macro research for Asia excluding Japan, wrote in a Tuesday note that China's tariff move "ups the ante on an escalatory tit-for-tat trade conflict" if Trump lifts tariffs.

Trump has also placed 25% tariffs on Canada and Mexico — but later delayed the measures until March after reaching agreements to strengthen border protections with Mexico's President Claudia Sheinbam and Canada's Prime Minister Justin Trudeau.

Cutting a deal with China may be harder.

"The overarching geo-economic dimensions to US-China trade means that resolution will be far more fraught than is the case with Mexico and Canada," Varathan wrote.

Trump's approach to trade with China echoes his first term in office. Throughout 2018 and 2019, the president placed tariffs on hundreds of billions of dollars worth of Chinese products, including tech equipment and plastics. In 2019, China responded by placing 10% retaliatory tariffs on $75 billion of US imports.

Some lawmakers and billionaires have urged the president to rethink his tariff plan, saying that it will cost small businesses and American consumers.

China is a major producer of US electronics, and it's likely that cellphones, laptops, and other devices could become more expensive.

The White House did not immediately respond to a request for comment from Business Insider.

• President Donald Trump is threatening significant tariffs on manufacturers in China.
• China could pull out tools to protect its economy, some developed during the first Trump term.
• Beijing may ratchet up trade restrictions or change its monetary policy.

China is President Donald Trump's prime target for a trade war — again. But China already put its boxing gloves on.

In his first term, Trump slapped high tariffs on a range of Chinese goods. This time, the President has pledged blanket tariffs of 60% on Chinese imports. On January 21, Trump threatened 10% tariffs on China that could come as soon as February.

But four years of Trump 1.0 has given China plenty of time to formulate its strategy — and countermeasures.

"Depending on the range of such new US tariff measures, China is likely to respond to significant US tariff hikes by imposing retaliatory tariff countermeasures on US imports," Rajiv Biswas, an international economist and the author of "Asian Megatrends," told Business Insider.

As Zhu Min, an economist and former Chinese central bank official, said at a at panel session on January 22, "China understands much better now" what a Trump presidency brings.

This is how China could respond:

Limiting raw materials for high-tech products

The US-China rivalry is firmly in its tech phase, with Beijing's new economic growth areas of electric vehicles, solar cells, and lithium batteries in the spotlight.

The Biden administration had already limited the export of high-tech chips to China. There could be more curbs on the way targeting China's AI development — especially after US markets were spooked by DeepSeek's new model.

"I expect a continuation of the strict US prohibition on exporting advanced semiconductors to China," Olivier Blanchard, the research director for AI devices at tech research firm The Futurum Group, told Business Insider. "The AI race between the US and China doesn't stop because of a change in US administrations."

In the battle against the US for global tech supremacy, China has the upper hand in at least one critical area: rare earths, the raw materials in tech products ranging from semiconductors to industrial magnets to some solar panels.

China — which has long dominated the rare earths market — has been tightening its grip for more than a year.

In December, China announced that it was banning the exports of gallium, germanium, and antimony — key minerals used in the making of chips, fiber optic cables, and weapons — to the US, citing national security.

The end game is about tech supremacy. Some analysts are comparing the US-China race to a new Cold War.

"The heart of the issue is concern about how China will use AI chips for military applications and surveillance," Chris Tang, a UCLA professor and expert in global supply chain management and the impact of regulatory policies, told BI in November. "It's a different type of Cold War."

Tried and tested methods

China could also return to tried-and-tested methods of financial policy maneuvers and import controls.

"China could weaken its currency against a strong dollar to support its exports, while carefully managing the pace of depreciation via its daily renminbi fixing rate and a variety of other administrative tools in the currency market," wrote Betty Wang, a lead economist at Oxford Economics, on November 12 — a week after Trump won the presidential election.

Last month, China shifted its monetary policy approach from "prudent"  to "moderately loose" — which would boost liquidity and lending. In September, China launched an aggressive stimulus package to boost the markets.

In trade, Beijing could ramp up countermeasures against US agriculture products. In 2018, China slapped 25% tariffs on US soybeans, beef, pork, wheat, corn, and sorghum imports to retaliate against Trump's tariffs.

A tariff exclusion mechanism in the January 2020 US-China trade deal has kept American soybeans flowing to China, albeit at lower levels. China's policies could change if Trump imposes high tariffs on Chinese goods.

The US accounted for 20% of China's soybean imports in 2024, down from 40% in 2016.

"In a scenario where China imposes retaliatory tariffs on US soybeans in 2025, the impact would again likely be a substantial economic loss for the US soybean industry due to lower US domestic soybean prices and declining US soybean exports to China," Biswas, the economist, said.

Other agricultural imports from the US could also be subject to more restrictions, said Biswas.

Beyond exports and imports, China is likely to turn inward to strengthen domestic consumption through fiscal stimulus as authorities try to engineer a turnaround for its flagging economy.

The country will also double down on its status as the world factory floor, especially in high-tech manufacturing, to retain its competitiveness, said Zhu, who was a former deputy managing director of the International Monetary Fund.

"We focus on competitiveness regardless of what happens outside China. We'll be able to survive," Zhu said at the World Economic Forum.

Trump and Beijing are both weighing a trade war

Trump appears to prefer avoiding tariffs to resolve the US' trade disputes with China.

"We have one very big power over China, and that's tariffs, and they don't want them," the president told Fox News in an interview that aired Thursday. "And I'd rather not have to use it. But it's a tremendous power over China."

On Sunday, the White House walked back its 25% tariff threat against Colombia after making a deal on migrant transportation.

Meanwhile, most analysts expect continued economic challenges in China this year due to flagging consumer confidence — which means Beijing would prefer not to have to engage in a trade war, too.

"Differences and frictions need to be handled through dialogue and consultation," said Mao Ning, the spokesperson for China's foreign ministry, on Friday. "Trade and tariff wars have no winners and are in the interest of no one, still less the world."

Should the two powers still end up in a trade war, China will have more leverage this time around because it's now less reliant on the US, wrote Lynn Song, the chief economist for Greater China at ING, on Thursday.

The US accounted for 14.6% of China's exports in 2024 — down from 18.2% in 2017. That opens the possibility for "more aggressive retaliation from China if it is pushed into a corner," wrote Song, citing expert controls and more targeted tariffs on large American companies.

"The world has changed a lot since the first trade war broke out in 2018," he added.

• Russia's latest economic figures show it had a strong 2024.
• But economists are suspicious, believing its data don't stand up to scrutiny and is inflated.
• This week, Trump threatened high tariffs and more sanctions if Russia doesn't end the Ukraine war.

Economists are questioning Russia's latest economic data, as they say recently published and cited figures don't seem to match its real economic predicament.

During an economic meeting on Wednesday, President Vladimir Putin claimed that 2024 was a "strong year" for Russia.

He cited what he described as a manageable 1.7% deficit, and a 26% increase in non-oil and gas revenue to 25.6 trillion rubles, about $257.9 billion.

A day earlier, Russia's finance ministry released a report saying that the country's budget revenue in December was over 4 trillion rubles, or about $40 billion — a 28% increase compared to December 2023, and the highest level recorded since 2011.

However, some are growing skeptical of the data shared by Russian authorities.

On a panel at the World Economic Forum in Davos on Wednesday, Elisabeth Svantesson, the finance minister of Sweden, said Putin "wants us to believe that Russia's economy is strong" and that Western sanctions aren't effective.

"But when you dig a bit deeper, you'll see that's not the case," she said, pointing to a report commissioned by the Swedish government.

That analysis, published in September by the Stockholm Institute of Transition Economics, found mounting imbalances and an inconsistent policy mix in the Russian economy — including massive stimulus and subsidies amid record-high interest rates.

The report also warned that official statistics like GDP growth and inflation rates were tainted by the Kremlin's propaganda machine and "manipulated to support the narrative that the Russian economy is stable."

"It's very clear that Russia's economy isn't as strong as Putin wants us to believe," Svantesson said, pointing to capital flight and nighttime satellite photos as potential evidence.

Iikka Korhonen, head of research at the Bank of Finland Institute for Emerging Economies, made a similar statement.

Korhonen said that Russia has largely stopped publishing its foreign trade data and fiscal data, in sharp contrast to before its full-scale invasion of Ukraine in 2022.

"Of course, Putin will put a positive spin on all pieces of data," he said.

As such, the published data may be correct, he added, "but they always leave out negative data and important context."

Economists on the MMI Telegram channel, a Russian discussion group, also highlighted a December Bank of Russia report on the country's balance of payments.

On Wednesday, the group said that Russia's fiscal surplus dropped last month to its lowest level since August 2020, at an estimated $5.6 billion.

While the Bank of Russia described the fiscal surplus as "stable," the MMI Telegram channel said $5.6 billion was not enough to cover the deficit in trade in services, repayment of foreign debt, and demand for foreign assets from citizens and businesses.

It added that the falling fiscal surplus was also piling pressure on the ruble, which fell to a two-year low against the dollar in November.

In a note on Thursday, TsMAKP, a think tank linked to the Russian government, highlighted what it said appeared to be inconsistencies and miscalculations in Russia's official economic data.

It said that while reported GDP growth of 3.8-4% in 2024 appeared strong, real production activity has stagnated since the third quarter of 2023 and investment estimates appeared inflated.

At the same time, the Institute for the Study of War, a Washington DC-based think tank, has questioned Russia's finance ministry report, which said that Russia's revenue hit a record high of about $40 billion in December.

It said Russia's figures failed to account for its unsustainable defense spending, high rates of inflation, a widening deficit, and the depletion of its sovereign wealth fund.

Anders Åslund, a Swedish economist and former fellow at the Atlantic Council, said this month that Russia's financial reserves could run out before the end of the year.

Not everyone is so down on the Russian economy.

Vasily Astrov, an economist at the Vienna Institute for International Economic Studies, acknowledged indicators showing a slowdown in Russia's GDP growth and high inflation, but said that Russia's defense spending of 6% of its GDP could be sustainable for "quite some time."

Exiled Russian economist Vladislav Inozemtsev wrote in November that Russia's war economy isn't in imminent danger of collapse.

And Alexander Kolyandr, a financial analyst and non-resident senior scholar at the Center for European Policy Analysis, told BI in an interview last month that with all "extraordinary" factors remaining unchanged, he didn't see any economic "collapse or meltdown" in Russia.

Even so, the US tightened sanctions against Russia earlier this month, and on Wednesday, President Donald Trump threatened high tariffs and more sanctions if it doesn't end the war.

Anders Olofsgård, a deputy director at the Stockholm Institute of Transition Economics, said oil and gas exports are by far the most important lubricant of the Russian economy, so global prices, the discount on Russian oil, and the ability to shut down Russia's shadow fleet are key.

Right now, however, Roman Sheremeta, an associate professor of economics at the Weatherhead School of Management at Case Western Reserve University, said that Putin "needs to show that he can continue this war, that his economy is capable of sustaining the Kremlin war machine for the next 2-3 years."

Otherwise, he said, Putin's "future negotiation position will be drastically undermined."

• Chinese firms that are setting up operations in countries outside China could face more scrutiny.
• Governments could start focusing on the ownership of companies rather than where goods come from.
• This would mean Chinese firms working outside China to avoid tariffs wouldn't be spared from levies.

America could lock out Chinese companies that use other countries to circumvent tariffs, a top think-tank chief said.

Companies — including Chinese ones — have been shifting some production out of China. They're trying to diversify their supply chains, which have been under more pressure in recent years thanks to the first Trump administration's tariffs and Beijing's disruptive pandemic lockdowns.

"I think there will be a lot of focus on if China's using other countries for transshipment or if it's Chinese companies that are going into another country, you're going to see a new form of protectionism where we focus on rules of ownership, not rules of origin," Michael Froman, the president of the US-based Council on Foreign Relations, said at a panel on Thursday at the World Economic Forum in Davos, Switzerland.

Trade is traditionally viewed based on the rules of origin, or which country a product came from. This is also how tariffs are generally applied.

But Froman, who served as the US trade representative from June 2013 to January 2017 under the Obama administration, said governments could soon start to look at trade in a new way: through the lens of company ownership. This change would hit Chinese companies that are using transshipment hubs to avoid punitive measures.

"So it doesn't matter that it's coming from Mexico or Indonesia. If it's a Chinese company and they're violating rules, or they're trying to circumvent the tariffs, they may well find themselves blocked from the United States," Froman said.

In his first week in office, President Donald Trump said a 10% tariff on Chinese goods could come as soon as next month. While on the campaign trail, he threatened to put much higher tariffs — 60% — on Chinese goods.

Mexico, an auto hub, is becoming a prime location for Chinese manufacturers to relocate to because the US is a key market for vehicles and parts.

In 2023, Chinese companies announced $2.7 billion worth of investments in Mexico's auto sector, according to an analysis from research provider Rhodium Group. This is nearly three-quarters of Chinese investment into Mexico and is dominated by vehicle-parts manufacturers.

The West is concerned about Chinese overcapacity

The West has slammed China's overproduction of goods that have poured into global markets and hurt their economies.

"China is flooding strategic sectors with supply that's well beyond what global demand can plausibly absorb, and therefore wiping out the competition," said Daleep Singh, then a deputy national security advisor at the White House, in October.

At the same time, China is framing the West's concerns about overcapacity as protectionism and as moves to curtail the country's economic development.

"The US and Europe basically maintained an open rules-based system, but the rest of the world greatly benefited from including China," Froman said.

"But all throughout that period, that benign international environment, we were warning China that if they continue to engage in protectionism, close their market to foreign investment, subsidize their industries at the expense of other countries, that benign international environment would disappear — and that's exactly what's happened," he said.

• Saudi Arabia said it will invest at least $600 billion in the US over the next four years.
• President Donald Trump has long enjoyed a good relationship with Saudi Arabia's crown prince.
• Trump has moved quickly since taking office, signing executive orders and announcing investments.

Saudi Arabia's Crown Prince Mohammed bin Salman has told newly inaugurated President Donald Trump that his oil-rich nation will invest at least $600 billion in the US over the next four years.

The crown prince told Trump about the investment during a congratulatory phone call on Wednesday evening, per a report from the state-run Saudi Press Agency published on Thursday.

According to the report, the two leaders discussed how the US and Saudi Arabia can work together to promote peace and security in the Middle East.

Representatives for Trump and Saudi Arabia's foreign ministry did not respond to requests for comment from Business Insider.

Trump has long enjoyed a good relationship with the crown prince. Saudi Arabia was the first foreign nation he visited during his first term.

When Trump met the crown prince in June 2019, he described him as a "friend of mine " and lauded him for "opening up Saudi Arabia."

Deal after deal

Shortly after being sworn in on Monday, Trump moved quickly, issuing a wave of executive orders covering areas including trade, immigration, and energy.

He's also been working on making deals, both domestically and abroad.

On Monday, Trump signed an executive order that would pause the ban on TikTok for 75 days. Trump said while signing the order that the US should own half of TikTok if he's able to halt the ban.

"I may not do the deal, or I may do the deal. TikTok is worthless, worthless, if I don't approve it," Trump said, adding that the social media platform could be worth $1 trillion.

And on Tuesday, Trump announced Stargate, a new joint venture between OpenAI, Oracle, and SoftBank. The president said Stargate plans to invest up to $500 billion in AI infrastructure across the US.

"Before the end of my first full business day in Washington and the White House, we have already secured nearly $3 trillion of new investments in the United States and probably that's going to be six or seven by the end of the week," Trump said while announcing Stargate on Tuesday, though he did not elaborate on the sources of the new investments.

Later, on Wednesday, Trump made an overture to Russian President Vladimir Putin about the Ukraine war. Trump said in a Truth Social post that he was doing Russia a big favor by offering to end the conflict.

"If we don't make a 'deal,' and soon, I have no other choice but to put high levels of Taxes, Tariffs, and Sanctions on anything being sold by Russia to the United States, and various other participating countries," Trump wrote.

"We can do it the easy way, or the hard way - and the easy way is always better," Trump added.

Saudi Arabia has its own priorities

It is unclear how Saudi Arabia's new investment in the US aligns with its economic priorities.

In 2016, Saudi Arabia launched its Vision 2030 plan to transform its oil-dependent economy into a more diversified one boosted by tourism and sports. The kingdom has already pumped billions into its economic pivot, with some investments going to the US.

But Saudi Arabia's sovereign wealth fund, the Public Investment Fund, said last year that it would focus more on its domestic economy. The PIF is the world's sixth-largest sovereign wealth fund, per the Sovereign Wealth Fund Institute.

The PIF's governor, Yasir Al Rumayyan, told delegates at Saudi Arabia's Future Investment Initiative business conference in October that the fund was planning to cut the proportion of foreign investments from 30% to between 18% and 20%.

"A lot of people would come looking for our money to be invested abroad. But that thing shifted over the years," Al Rumayyan said.

"So now, we're more focused on the domestic economy and we've been achieving and doing so many big things," he added.

• US President Donald Trump said he could impose 10% tariffs on Chinese goods from February 1.
• China's stock markets fell after Trump's comments, breaking several straight days of gains.
• Trump had said he could slap tariffs of 25% on Canada and Mexico from February 1.

On his first day in office, President Donald Trump signed a raft of executive orders and threatened Canada and Mexico with 25% tariffs that could come as soon as next month.

China got a pass on day one, but the break didn't last long.

On Tuesday, his second day in office, Trump said he could impose tariffs on China next month.

"We're talking about a tariff of 10% on China, based on the fact that they're sending fentanyl to Mexico and Canada," Trump said at a press conference.

"Probably February 1 is the date we're looking at," Trump said.

Trump previously threatened 60% tariffs on Chinese goods while on the campaign trail.

China is calling for better dialogue and cooperation for mutual benefit.

"Keeping business ties sound and stable serves the fundamental interests of both countries and both peoples, it is also conducive to global economic growth," China's Foreign Ministry spokesperson, Guo Jiakun, said at a scheduled press conference on Tuesday.

China's stock markets fell on Wednesday following Trump's comments, breaking several straight days of gains.

The CSI300 Index closed 0.9% lower. Hong Kong's Hang Seng Index closed 1.6% lower.

Trump's consistent threats of tariffs reflect his "American First" trade agenda, which he outlined in a presidential memo on Monday.

In the memo, Trump asked the US Trade Representative to assess China's compliance with a trade deal the two countries signed in early 2020 and recommend actions — including tariffs — as needed.

China did not meet the import requirements in the trade deal, economists from Nomura wrote in note on Tuesday.

"The concern here is that this gives the Trump administration another reason to impose additional stiff tariffs or trade demands on China to force compliance with the original trade deal," the economists wrote.

On Tuesday, Trump also took aim at the European Union.

"We have a $350 billion deficit with the European Union. They treat us very very badly, so they're going to be in for tariffs," Trump said.