President Trump says the Chinese tariffs are a response to trade deficits, and the flow of fentanyl into the US The United States runs a trade deficit with the European Union, which means it imports more from European countries than it sells to them.

The world’s two largest economies did not strike a deal to avert sweeping U.S. tariffs, which came into effect after midnight. Beijing immediately retaliated.

U.S. tariffs of 10% on Chinese imports came into effect on Tuesday, risking a renewed trade war between the world's top two economies as President Donald Trumppunishes China for not halting the flow of illicit drugs.