China announced a wide range of measures on Tuesday targeting U.S. businesses including Google (GOOGL.O), farm equipment makers and the owner of fashion brand Calvin Klein, minutes after new U.S. tariffs on Chinese goods took effect.
Beijing also slapped tariffs on U.S. products such as coal, oil and some autos in a rapid response to the new duties on Chinese goods imposed by U.S. President Donald Trump, escalating trade tensions between the world’s two biggest economies.
China’s State Administration for Market Regulation said Google was suspected of violating the country’s anti-monopoly law and an investigation was initiated in accordance with the law. It did not provide further details on the investigation or on what it alleged Google had done to breach the law.
Google products such as its search engine are blocked in China and its revenue from there is about 1% of global sales. It still works with Chinese partners such as advertisers.
In 2017, Google announced the launch of a small artificial intelligence centre in China. But the project was disbanded two years later and the firm does not conduct AI research in China, according to a blog posting.
Separately, China’s Commerce Ministry said it had put PVH Corp (PVH.N), the holding company for brands including Calvin Klein and Tommy Hilfiger, and U.S. biotechnology firm Illumina (ILMN.O), on its “unreliable entity” list.
It said the two companies took what it called “discriminatory measures against Chinese enterprises” and “damaged” the legitimate rights and interests of Chinese companies.
Companies added to the blacklist can be subject to fines and a broad range of other sanctions, including a freeze on trade and revocation of work permits for foreign staff.
While Google declined to comment, PVH said it was “surprised and deeply disappointed” by the ministry’s decision, saying that the company maintains “strict compliance with all relevant laws and regulations and operates in line with established industry standards and practices.”
PVH added it would continue engagement with relevant authorities and look forward to a positive resolution.
Illumina did not respond to a request for comment.
Shares of both PVH and Illumina were down nearly 4% each in premarket U.S. trading, while Google-parent Alphabet rose 1%.
PVH had already been under scrutiny from Chinese regulators over “improper” conduct related to the Xinjiang region.
“These moves are warnings that China intends to harm U.S. interests if need be, but still give China the option to back down,” Capital Economics said in a note.
“The tariffs could be postponed or cancelled before they come into effect… The probe against Google could conclude without any penalties.”
TESLA AND FARM EQUIPMENT FIRMS
China also announced 10% tariffs on imports of U.S. farm equipment that could impact firms such as Caterpillar (CAT.N), Deere & Co (DE.N), opens new tab and AGCO (AGCO.N), as well as a small number of trucks and big-engine sedans shipped to China from the United States.
That could apply to Elon Musk’s Cybertruck, a niche offering Tesla (TSLA.O),has been promoting in China, as it awaits regulatory clearance to begin sales.
China’s Ministry of Industry and Information technology designated the Cybertruck as a “passenger car” in a posting in December that was quickly deleted.
If the Cybertruck was designated as an electric truck, Tesla would face a 10% tariff on any future imports from its factory in Texas.
Tesla had no immediate comment.
The new tariffs on U.S. products will start on Feb. 10, the ministry said.
The announcements made on Tuesday ramped up trade restrictions between Beijing and Washington that had been largely limited to the tech sector under the administration of former U.S. President Joe Biden, which sought to restrict China’s access to high-end semiconductors.
