WASHINGTON/BEIJING — US President Donald Trump said on Tuesday (Feb 4) he is in no hurry to speak to Chinese President Xi Jinping to try to defuse a new trade war between the world's two largest economies sparked by his sweeping 10 per cent tariffs on all Chinese imports.

China imposed targeted tariffs on US imports on Tuesday and put several companies, including Google, on notice for possible sanctions, in a measured response to Trump's tariffs.

"That's fine," Trump said at the White House when asked about China's retaliatory duties.

A conversation between Xi and Trump is seen as key to a potential easing or delay of tariffs, as conversations with Mexican and Canadian leaders did on Monday.

White House spokeswoman Karoline Leavitt told reporters that a Trump-Xi call still needed to be scheduled.

"President Xi did reach out to President Trump to speak about this, maybe to begin a negotiation. So we'll see how that call goes," Leavitt told Fox Business Network earlier on Tuesday.

Beijing's limited reply to Trump's imposition of a 10 per cent tariff on all Chinese imports underscored the attempt by Chinese policymakers to engage Trump in talks to avert an outright trade war between the world's two largest economies.

Liu Pengyu, spokesperson for the Chinese embassy in Washington, said China hoped Washington would work with Beijing to ensure stable, healthy and sustainable ties between the two countries.

The International Monetary Fund, which last month warned that a spike in protectionist policies could hit investment and disrupt supply chains, said it was "in the interests of all to find constructive ways to resolve disagreements and enable trade."

Capital Economics, a UK-based research firm, estimated that China's additional tariffs would apply to about US$20 billion (S$27 billion) of annual imports, compared with the $450 billion worth of Chinese goods subject to the Trump tariff that took effect at 12.01am ET on Tuesday.

"The measures are fairly modest, at least relative to US moves, and have been calibrated to send a message to the US," Julian Evans-Pritchard, the firm's head of China Economics, said in a note.

Trump on Monday suspended his threat of 25 per cent tariffs on Mexico and Canada, agreeing to a 30-day pause in return for concessions on border and crime enforcement.

Europe next?

Trump suggested on Sunday that the European Union would be his next target for tariffs, but did not say when.

Ursula von der Leyen, head of the EU's executive European Commission, said Brussels would be ready for tough negotiations but underlined the need to lay foundations for a stronger partnership with the EU's largest trade and investment partner.

"We will be open and pragmatic in how to achieve that. But we will make it equally clear that we will always protect our own interests – however and whenever that is needed," she said in a speech.

The European Commission and the new US administration have been in contact at a technical level but von der Leyen and Trump have not spoken directly yet, a Commission spokesperson said.

China's new measures, announced as the Trump tariffs took effect, include a 15 per cent levy on US coal and LNG and 10 per cent for crude oil, farm equipment and a small number of trucks as well as big-engine sedans shipped to China from the US.

China said it was starting an anti-monopoly investigation into Alphabet's Google. It put PVH Corp, the holding company for brands including Calvin Klein, and US biotechnology company Illumina, on a list for potential sanctions.

PVH said in a statement it was surprised and "deeply disappointed" by China's decision, adding it maintains strict compliance with all relevant laws, regulations and standards.

"Illumina has a long-standing presence in China ... Wherever Illumina operates, we comply with all laws and regulations," an Illumina spokesperson said in an email.

Google declined to comment on the investigation.

Export controls on some metals

China said it was imposing export controls on some metals, including tungsten, that are critical for electronics, military equipment and solar panels.

The 10 per cent duty China announced on electric trucks imported from the US could apply to Elon Musk's Cybertruck, a niche offering Tesla has been promoting in China. Tesla had no immediate comment.

China's new tariffs will not take effect until Monday, giving Washington and Beijing time to try to seek a deal that Chinese policymakers have indicated they hope to reach with Trump as China's domestic demand sputters.

During his first presidential term, Trump initiated a two-year trade war with China over its US trade surplus, with tit-for-tat tariffs upending global supply chains and damaging the world economy.

"The trade war is in the early stages so the likelihood of further tariffs is high," Oxford Economics said in a note as it downgraded its China economic growth forecast.

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

China has called fentanyl America's problem and said it would challenge the tariffs at the World Trade Organisation and take other countermeasures, while leaving the door open for talks.

The US is a relatively small source of crude oil for China, accounting for 1.7 per cent of its imports last year, worth about $6 billion. Just over 5 percent of China's LNG imports come from the US.

"Even if the two countries (the US and China) 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," said Gary Ng, senior economist at Natixis in Hong Kong.

There was relief in Ottawa and Mexico City after Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum said they had agreed to bolster border enforcement, pausing for 30 days the 25 per cent US tariffs due to take effect on Tuesday.

EU trade chief Maros Sefcovic said he wanted early talks with the US to ward off potential tariffs.

"We believe through constructive engagement and discussion we can resolve this problem," he said.

Source: Reuters