China imposes counter-tariffs on US imports, launches anti-trust probe against Google

Trump warned he might increase tariffs on China further unless Beijing stemmed the flow of fentanyl, a deadly opioid, into the US

China's finance ministry on February 4 announced a package of tariffs on a range of US products in an immediate response to a 10% tariff on Chinese imports announced by US President Donald Trump that went into effect at 0501 GMT, reported Reuters.

The ministry said 15% tariff will apply on US coal, liquefied natural gas and additional 10% tariff will be imposed on crude oil, farm equipment and some autos and will take effect on February 10.

China's anti-monopoly regulator announced an investigation into Google in an apparent retaliatory move, moments after President Donald Trump slapped a 10% tariff on Beijing reigniting a trade war between the word’s largest economies.

China will probe the US tech giant for alleged anti-trust violations, according to a Tuesday statement from the State Administration for Market Regulation.

The statement did not offer any further details on the investigation.

Google products such as its search engine are blocked in China, but it works with local partners such as advertisers in the country.

China's Commerce Ministry and its Customs Administration said on Tuesday that to "safeguard national security interests" the country is imposing export controls on tungsten, tellurium, ruthenium, molybdenum and ruthenium-related items.

Indian benchmarks Sensex and Nifty pared gains after China announced counter tariffs with Nifty falling bellow 23,500 while its day's high was 23,582. At 11:15 am, Sensex was trading 300 points lower from day's high at 77,650.

The Indian rupee struggled to hold gains on Tuesday after China said it will impose tariffs on US goods in retaliation to Trump's levies.

The dollar rose against its major peers, US equity futures declined, and the Chinese yuan dropped following China's announcement.

The US leader over the weekend ordered a blanket levy on Chinese exports to take effect after midnight on Tuesday in the US, for what he calls Beijing’s failure to prevent the flow of illegal drugs. The orders — also affecting Mexico and Canada — included retaliation clauses that would increase tariffs if the countries responds in kind.

The US has imposed a 10% tariff on all Chinese goods, firing the opening shot of a fresh trade war with Beijing even as President Donald Trump plans to hold talks with his counterpart Xi Jinping.

A midnight deadline in the US for the duties to go into effect passed on Tuesday, hours after Trump reached separate agreements with the leaders of Canada and Mexico to delay 25% duties for a month.

The offshore yuan extended losses, dropping 0.3% to 7.3340 offshore. The onshore market is closed amid the Lunar New Year holiday.

China has called fentanyl America's problem and said it would challenge the tariffs at the World Trade Organization and take other countermeasures, but also left the door open for talks.

Trump warned he might increase tariffs on China further unless Beijing stemmed the flow of fentanyl, a deadly opioid, into the United States.

"Unlike Canada and Mexico, it is clearly harder for the U.S. and China to agree on what Trump demands economically and politically. The previous market optimism on a quick deal still looks uncertain. Even if the two countries can agree on some issues, it is possible to see tariffs being used as a recurrent tool, which can be a key source of market volatility this year. At the same time, China has opted for a more targeted approach in tariffs, export control, and market access restriction, basically flexing its muscles as one of the biggest markets and producers," Gary Ng, senior economist, Natixis, Hong Kong told Reuters.

Bitcoin came under selling pressure and fell 3% to $98,750.

S&P 500 futures, which had bounced in relief that Mexico and Canada had cut deals to delay a tariff hit, swung to a 0.4% loss. European futures slipped 0.2% and the euro skidded beneath $1.02 on nerves Europe may be next.

With inputs from agencies