China In Eurasia

U.S. President Donald Trump has imposed punishing new tariffs on Mexico, Canada, and China that set the stage for broader tensions with the United States’ three largest trade partners.

Trump announced the long-promised economic policy on the night of February 1, saying that Washington would hit Canada and Mexico with tariffs of 25 percent on all goods, although Canadian energy products will face a lower 10 percent tariff. The new tariffs also include a 10 percent levy on goods from China.

He said he was imposing them until the flow of migrants and illegal fentanyl into the United States was stopped, although the cause of those issues is widely debated and involves a number of complex factors.

Trump said that the taxes on goods from all three countries will start to come into effect on February 4.

The sweeping measures risk igniting a trade war that could significantly damage the economies of the targeted countries and the United States, especially as Canada, Mexico, and China look to respond.

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In preparation for this, the executive order signed by Trump also includes a clause that allows the president to expand the tariffs if a country imposes retaliatory measures on the United States.

Shortly after Trump signed the executive order for the tariffs, both Canada and Mexico said they were preparing moves of their own.

Mexican President Claudia Sheinbaum said her country will impose tariffs in response, and Canadian Prime Minister Justin Trudeau announced “far-reaching” retaliatory moves.

China’s Ministry of Commerce also issued a statement saying that Beijing will file a legal case against the United States at the World Trade Organization (WTO) and “take corresponding countermeasures,” without elaborating further.

Canada, Mexico, China Respond

Together, the three countries hit by Trump’s tariffs accounted for more than 40 percent of imports into the United States last year.

In her televised response, Sheinbaum said she had instructed her economy minister to respond with a variety of measures, including potential tariffs of 25 percent on American products.

She also called allegations that the Mexican government had alliances with criminal organizations "slander" and said that Washington needs to do more to curb the flow of illegal weapons into Mexico that are used by cartels.

The Mexican president said that she was open to finding a solution with the United States, but added that “problems are not resolved by imposing tariffs, but by talking."

Canadian Prime Minister Justin Trudeau also said his country will respond with 25 percent tariffs on $155 billion worth of U.S. products, which will be implemented in stages in the coming weeks.

In a press conference, Trudeau also said there are measures being considered that are related to critical minerals and procurement from the United States, although he did not elaborate.

"We don't want to be here, we didn't ask for this," Trudeau said. "But we will not back down in standing up for Canadians."

He then countered Trump’s past statements that the U.S.-Canada border is a security concern, saying that less than one percent of the fentanyl entering the United States comes across the northern border.

Trudeau also called on Canadians to “buy less American products … choose Canadian products and services rather than American ones.”

The Canadian prime minister also opened the door for further discussion with Washington, saying that Canada was willing to implement a nearly $1 billion investment into border security in order to avoid the tariffs.

The 10 percent tariff placed on China will add to previous tariffs that were imposed by former U.S. President Joe Biden and Trump during his first term.

Beijing vowed to take action at the WTO and to carry out unspecified countermeasures that will “firmly safeguard its rights and interests.” China’s Foreign Ministry also defended its record on fentanyl, pointing to strict export restrictions it imposed in 2019.

What Happens Next?

The tariffs could lead to much higher costs for consumers, disrupt supply chains, and cost jobs in various sectors.

Canada, Mexico, and the United States have deeply integrated economies with an estimated $2 billion worth of manufactured goods crossing their borders daily.

Most economists say the tariffs and subsequent retaliation could raise prices on a wide range of products and cause inflation. That’s because importers, not the countries exporting the goods, pay the tariff, and they typically pass that cost on to consumers in the form of higher prices.

On January 31, Trump acknowledged there could be "some temporary, short-term disruption" from the tariffs when he was asked by reporters about the coming levies, but he defended the policy, saying "the tariffs are going to make us very rich and very strong -- and we’re going to treat other countries very fairly.”

A January report by the Peterson Institute for International Economics, a Washington D.C.-based think tank, suggested the tariffs would slow growth and accelerate inflation, and that the measures would harm the economies of Canada, China, Mexico, and the United States.

Others have championed Trump’s tariffs.

Congressman Jason Smith (Republican-Missouri), who chairs the influential Ways and Means Committee -- which oversees issues related to taxation, revenue generation, and government spending -- praised the move.

“The tariffs on imports from Canada, Mexico, and China send a powerful message that the United States will no longer stand by as other nations fail to halt the flow of illegal drugs and immigrants into our country,” he said in a February 1 statement. “These measures will also bring in billions in new revenue to the U.S. government.”

Welcome back to the China In Eurasia briefing, an RFE/RL newsletter tracking China's resurgent influence from Eastern Europe to Central Asia.

I'm RFE/RL correspondent Reid Standish and here's what I'm following right now.

The Hybrid War

Another undersea cable was severed in the Baltic Sea, this time between Latvia and Sweden, prompting Swedish authorities to board and seize the vessel that was sailing from Russia amid sabotage fears, as I reported here.

This comes as similar incidents damaging undersea cables have recently affected Taiwan, with suspicions there turned toward China.

Finding Perspective: The spate of incidents highlights growing tensions in both the Baltic Sea and across the Taiwan Strait.

The investigation into the January 26 incident in the Baltic has just begun, but the episode is the latest in a series of similar incidents in the Baltic Sea in which critical seabed energy and communications lines have been damaged.

In December, an oil tanker linked to Russia's so-called shadow fleet was suspected of damaging undersea links with a loose anchor. A month earlier, a Chinese ship was involved in a separate incident. A Chinese-flagged ship traveling from Russia also damaged a Baltic gas pipeline in October 2023.

Off the coast of Taiwan, an undersea data cable was damaged on January 3 and Taipei suspects China. Beijing has denied this, but Taiwanese officials say this is part of an uptick of similar episodes in recent years.

Taipei is also looking to learn from the experiences in the Baltic. The Financial Times reported that Taiwan's Coast Guard has now drawn up a blacklist of 52 Chinese-owned ships that Taipei says are part of Beijing's own "shadow fleet" and officials have also devised plans to board them.

Why It Matters: Analysts say the hybrid tactics are worrisome because they're often seen as a way to wear down and test the responses of an adversary as a precursor for a wider conflict.

While there is no smoking gun that connects Beijing and Moscow in what they're doing in Europe and Asia, the two are increasingly linked by a partnership whose main bond is their desire to change the global order.

As I reported here with my colleague Sashko Shevchenko from our reporting trip to Taiwan, China and Russia also appear to be taking lessons from one another.

"There shouldn't be any doubt that Russia is behind these incidents in the Baltic," Gabrielius Landsbergis, Lithuania's former foreign minister, told me. "For China, there is no clear attribution, but if it wanted to build up pressure on Taiwan through a shadow war by cutting cables, there are lessons to learn about that from Moscow."

As Sashko and I also reported in Taiwan, the self-governing island is currently preparing for U.S. President Donald Trump's second term and is watching Washington's handling of the war in Ukraine for signals about what Trump 2.0 will mean for Taiwan.

Looking back at the hybrid tactics being used in the Baltic and around Taiwan, Chiu Chui-cheng, the minister of Taiwan's Mainland Affairs Council, told us that "we don't see these as accidents, we see them as strategy."

Three More Stories From Eurasia

1. Could China Play A Role In Ending The War In Ukraine?

As Trump looks to end the war in Ukraine, could Beijing play a role in helping bring Russian President Vladimir Putin to the negotiating table?

The Details: It's a question that's been around since the early days of Moscow's full-scale invasion but has largely gone nowhere amid China's diplomatic and material support for Russia.

It came up again last week as Trump looks to leverage his personal relationship with Putin and meet face-to-face. As I reported here, Trump has also talked up sanctions and mixed in criticism of Putin while saying they can strike a deal.

The U.S. president then called for Chinese leader Xi Jinping to play a larger role in bringing the war to an end, telling reporters on January 21 that he's pressed Xi on the topic during a phone call, and that he has "a lot of…power, like we have a lot of power" to end the war but that "he's not done very much on that."

2. Chinese Christian Sect Finds A Foothold in Romania

The Church of Almighty God, one of China's largest Christian sects, is finding followers all over the world and making new headway in Romania, where the group's online efforts are drawing new converts to its controversial teachings and helping to grow its presence across Central and Eastern Europe.

What You Need To Know: My colleague Simona Carlugea from RFE/RL's Romanian Service tracked the group and its growing online presence, where it is preaching in Romanian through virtual sermons to tens -- and even hundreds -- of thousands of group members.

The Church of Almighty God (CAG), also known as Eastern Lightning, claims millions of followers worldwide but has been labeled a "cult" and persecuted inside China.

Founded in 1989 in northeastern China by Zhao Weishan, a former physics teacher, the church is fixated on doomsday scenarios and holds that Christ has returned to Earth as a Chinese woman.

Arrests and alleged torture inside China have pushed much of the group abroad, where it has looked to find new converts.

3. U.S.-China Tech Race Heating Up

Less than two weeks after it looked like the Chinese-owned app TikTok was set to close in the United States, China has upped the artificial intelligence (AI) race by launching DeepSeek, which matches other market leaders for a fraction of the cost.

What It Means: As I wrote after Trump said he'd issue an executive order to extend the period for TikTok to find a non-Chinese buyer, the tech race between Beijing and Washington is just heating up.

DeepSeek's emergence represents something of a Sputnik moment for China. Five of the biggest technology stocks geared to AI -- chipmaker Nvidia and so-called hyperscalers Alphabet, Amazon, Microsoft, and Meta Platforms -- collectively shed almost $750 billion of market value before U.S. markets opened on January 27.

That could carry over into other areas of the tech competition as well, particularly for semiconductors and chip giant Nvidia if it proves true that DeepSeek was able to reach its heights without use of the company's most-advanced chips.

Across The Supercontinent

A Shakeup In Serbia: Serbian Prime Minister Milos Vucevic resigned following weeks of mass protests demanding accountability for a deadly accident in Novi Sad where the collapse of a concrete canopy killed 15 people at the northern city's rail station.

Critics have blamed rampant government corruption for the tragedy, and some have taken aim at opaque contracts with Chinese construction companies that renovated and rebuilt parts of the station.

Serbian authorities said Chinese firms did not replace the roof that collapsed and that the contracts will not be publicly disclosed due to secrecy provisions in the deals.

Taiwan Chip Tariffs: Trump said on January 27 that he plans to impose tariffs on imported chips, pharmaceuticals, and steel in an effort to get producers to make them in the United States as he took aim at industry leader Taiwan.

The island is home to the world's largest contract chipmaker, Taiwan Semiconductor Manufacturing Co. (TSMC), and is a key link in the global technology supply chain for companies such as Apple and Nvidia.

New Delhi to Beijing: India and China have agreed to resume direct flights between the two countries after nearly five years, the latest sign of a rapprochement after high tensions over a deadly border dispute.

One Thing To Watch

A top Chinese official on January 27 denied suggestions from the U.S. Central Intelligence Agency that the COVID-19 pandemic was triggered by the virus leaking from a lab.

The CIA issued a new public assessment about COVID just two days after former Republican lawmaker John Ratcliffe was sworn in as its new director. That assessment was issued with "low confidence" but it adds to lingering suspicions over the virus' origins and presents another flashpoint for tensions to rise between the United States and China.

That's all from me for now. Don't forget to send me any questions, comments, or tips that you might have.

Until next time,

Reid Standish

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