Trump Cracks Down on China with New Tariffs, Forcing Beijing Back to the Negotiating Table
Just weeks into his second term, President Trump reignites his trade war, imposing fresh tariffs on China, Mexico, and Canada—aiming to secure a tougher trade deal and curb fentanyl exports

Just two weeks into his second term, President Donald Trump has officially resumed his trade war.
The new measures impose a 25% tariff on imported goods from Mexico and Canada, though energy imports from Canada will be taxed at a reduced rate of 10%. Additionally, a 10% tariff has been placed on Chinese imports. The unexpected weekend announcement caught world leaders and Wall Street off guard but has reportedly prompted a response from Beijing.
According to The Wall Street Journal, China is now preparing for trade talks with the U.S. to renegotiate a trade agreement and reaffirm its commitment to stabilizing the yuan. The report, based on unnamed sources, has yet to receive official confirmation.
China’s Strategy for Trade Talks
As part of its negotiation efforts, Beijing is expected to propose reinstating the Phase One trade deal signed in early 2020 during Trump’s first term—an agreement that required China to increase U.S. imports by $200 billion over two years. While Trump once touted this as the “greatest deal” ever, trade experts had long questioned its feasibility.
Since China fell short of meeting its commitments under the initial agreement, Beijing is now looking to discuss ways to increase purchases of U.S. goods. Other aspects of China’s proposal reportedly include:
Tariffs as a Negotiation Tactic
Beijing sees the new 10% tariff as a strategic move by Trump to pressure China into negotiations. The president has also warned of escalating tariffs—potentially reaching as high as 60%—if trade talks do not progress.
So far, China’s official response has been measured. The country’s Commerce Ministry issued a statement expressing “strong dissatisfaction” with the tariffs and promising “corresponding countermeasures.”
China won’t be the first to crack. Earlier today, Mexico’s President Claudia Sheinbaum announced plans to deploy 10,000 soldiers to the border and intensify the crackdown on cartels—an effort to ease pressure from Washington amid rising trade tensions.
Economic analysts are already weighing in on the impact Trump's policy will have on China. Wang, the chief China economist at UBS, noted that the new 10% tariff could slow China’s GDP growth by 0.3 to 0.4 percentage points. Meanwhile, Goldman Sachs’ Dan Dooling provided a market overview, estimating that the tariffs on Canada and Mexico could increase U.S. core inflation by 0.7% and reduce GDP growth by 0.4%.
Market Reactions and Economic Projections
Trump’s unexpected tariff move has significantly shifted market expectations. Prediction markets initially placed a 30% chance of a major tariff increase in early 2025, but following the announcement, those odds have surged to 65%, according to Polymarket data.
The president’s aggressive tariff strategy is not only aimed at addressing trade imbalances but also at curbing the flow of fentanyl precursor chemicals from China. These chemicals, which are often trafficked through Mexico and Canada before reaching the U.S., have contributed to over 100,000 American overdose deaths per year.
With key global economies now preparing for negotiations, the coming weeks could determine the future of U.S.-China trade relations and the broader economic impact of Trump’s latest tariffs.