China Retaliates Against Trump with New Tariffs on U.S. Goods

Shortly after the U.S. tax went into force, Beijing slapped 10% to 15% duties on U.S. coal, liquefied natural gas, crude oil, pickup trucks, and other products.

HONG KONG— China announced a number of steps, including its own tariffs of 10% to 15% on certain U.S. items, in prompt retaliation Tuesday as a 10% U.S. tax on all Chinese exports went into effect.

According to the government, China will begin enforcing a 10% tariff on crude oil, agricultural machinery, large-displacement cars, and pickup trucks on February 10 and a 15% tax on coal and liquefied natural gas on February 10.

The Chinese declaration was made just minutes after the U.S. tax, the only one to proceed after President Donald Trump halted 25% tariffs he had announced on products from Canada and Mexico, went into effect at 12:01 a.m. ET.

A trade war between the two largest economies in the world might spin out of control if tit-for-tat tariffs with China are not prevented.

The Customs duty Commission of the State Council, China’s Cabinet, issued a statement saying, “This unilateral tariff hike by the U.S. side seriously violates World Trade Organization rules, does nothing to solve its own problems, and undermines normal China–U.S. economic and trade cooperation.”

U.S.-China trade war
On January 29, a container ship docks at Lianyungang Port in eastern China. Getty Images via AFP
Beijing also announced export restrictions on goods containing tungsten and other rare earth metals that are essential parts of high-tech equipment, as well as an inquiry into Google for suspected anti-trust crimes.

Additionally, it stated that PVH Corp., the parent firm of Calvin Klein and Tommy Hilfiger, and the American genome sequencing business Illumina would be placed on the “unreliable entity list,” which would limit their capacity to conduct business in China.

The Mainland For the Lunar New Year holiday, Chinese marketplaces are still closed. Although stocks in the Chinese enclave of Hong Kong pared gains, CNBC noted that other Asia-Pacific markets were largely remained up on the news that the tariffs from Canada and Mexico had been suspended.

Beijing claimed that in order “to protect its legitimate rights and interests,” it has sent the US tariff measures to the World Trade Organization.

According to a spokesman for the Chinese Ministry of Commerce, the additional U.S. tariff “is an egregious act, representing typical unilateralism and trade protectionism, and it seriously violates WTO rules.”

Since Trump’s first term, the United States has prevented the World commerce Organization from appointing appellate judges, which has largely prevented it from mediating conflicts involving international commerce. However, China may still use a lawsuit to rally support from other countries in opposition to the U.S. tariffs.

The Chinese Commerce Ministry stated that the U.S. strategy “damages the foundation of Sino-U.S. economic and trade cooperation, seriously undermines the rules-based multilateral trading system, and disrupts the stability of global industrial and supply chains.”

Trump imposed tariffs on a number of Chinese goods during his first term, and then-President Joe Biden kept them in place or, in certain situations, increased them.

Compared to the U.S. tax, which seems to apply to all Chinese goods, Beijing’s recently announced levies are more targeted, and some may have a greater impact than others. For instance, Google does little business in China and is barred there after leaving the nation in 2010 due to a censorship disagreement, and China imports very little crude oil from the United States.

Others might be more difficult. There aren’t many other sources of tungsten because the United States imports around 25% of it from China, which generates 80% of the global supply. Chipmakers like Nvidia employ the critical metal.

According to Tianchen Xu, senior economist at the Economist Intelligence Unit in Beijing, China’s tariffs are “largely symbolic” and would not have a significant effect on the United States. He also noted that they only applied to 8.5% of total Chinese imports from the United States in the previous year.

Additionally, they mark a shift in strategy from Trump’s first term, when China reacted more forcefully to tariffs. Now that China is experiencing an economic slowdown, that is more challenging.

In an email, Xu stated, “Trump will launch one attack after another because he wants a lot from the Chinese side.” “China does not intend to intensify the conflict because doing so would put additional strain on its economy.”

Trump cited border security and the illegal international flow of drugs like fentanyl when he imposed the 10% tariff on China and the 25% duty on products imported from Canada and Mexico on Saturday. No similar agreement seems to have been reached with China, despite the fact that the tariffs on Canada and Mexico have been suspended for 30 days following discussions with their presidents.

White House press secretary Karoline Leavitt stated Monday that Trump is scheduled to meet with Chinese leader Xi Jinping “in the next couple of days.”

In contrast to Canada, Mexico, and Colombia, all of which made concessions to the United States in order to prevent the immediate implementation of tariffs, China seems to be adopting a different strategy.

Alicia Garcia-Herrero, head economist for Asia Pacific at Natixis in Hong Kong, stated, “I would have waited to try to negotiate with Trump, because Trump might have avoided the tariffs for good if China had shown some compromise.”

In order to put pressure on Beijing to stop the flow of precursor chemicals from China to Mexico and other nations, where they are converted into fentanyl and trafficked into the United States, Trump stated the 10% tariff on China was implemented.

Although the United States and China claim Beijing has taken certain steps, China maintains that lowering domestic demand is the best method for the United States to address its lethal fentanyl epidemic and that tariffs may have an impact on future drug control cooperation.

The Chinese Embassy in Washington issued a statement on Tuesday stating that “fentanyl is a problem for the U.S.” “China has supported the U.S. response to this issue in the spirit of goodwill and humanity.”

The 10% tariff, according to Trump on Monday, was merely “an opening salvo.”

“The tariffs will be very, very substantial if we are unable to reach an agreement with China,” he stated.