Five ways China is hitting back against US tariffs

After China responded to the US’s individual implementation of tariffs with steps of its own, the trade war between the world’s two largest economies has gotten worse.

Following President Donald Trump’s blanket 10 % tax on all Chinese goods into the US, Beijing has set out to target particular American items with retaliatory income, among other steps.

This most recent tit-for-tat builds on the ongoing trade dispute between the countries, with tariffs having previously been imposed and threatened on a number of products since 2018.

A package may still be struck because Trump has stated he intends to speak with Chinese President Xi Jinping. What might the impact remain if China launches its response as planned on February 10th?

Trump’s tariffs have caused China to impose import taxes of its own on US coal and liquefied natural gas ( LNG ) of 10 %, as well as a 15 % sur crude oil.

Businesses wanting to buy fossil fuels from the US would have to pay the tax as a result of Beijing’s answer.

China is the world’s largest supplier of fuel, but it gets most of it from Indonesia, although Russia, Australia and Mongolia are also among its suppliers.

When it comes to the US, China has been increasing exports of LNG from the state, with levels almost double 2018 rates, according to Chinese customs information.

However, its overall trade in fossil fuels is reasonable, with US imports accounting for only 1.7 % of China’s full crude oil purchased from abroad in 2023. This suggests that China’s dependence on the US may be low, and the effects of the taxes might be low.

As the Kremlin tries to finance its war work, China may easily obtain more products from Russia, according to Rebecca Harding, a business analyst and chief executive of the Centre for Economic Security think container.

On the flipside, the US is the nation’s largest LNG supplier, and so has lots of other customers, especially the UK and the European Union.

As well as fuel, China has slapped a 10 % tariff on agricultural machinery, pick-up trucks, and some large cars.

However, China does not import a lot of US pick-ups and goods, therefore a 10 % tax on an already sizable number of exports would not be too harsh on consumers. It imports the majority of its cars from Europe and Japan.

China has increased opportunities in farm equipment in recent years to boost production, lower import dependence, and increase its food safety.

Therefore, it might be a new strategy to try to boost domestic market by imposing tariffs on agricultural technology.

Julian Evans-Pritchard, brain of China finance at firm Capital Economics, said all the price measures were “fairly reasonable, at least equivalent to US moves”.

He suggests that China’s targeted goods represent about$ 20bn ( £16bn ) worth of annual imports- around 12 % of China’s total imports from the US.

This is a significant improvement over the US’s US-targeted$ 450 billion in Chinese products.

However, he claimed that China had” clearly been calibrated to try to send a message to the US]and domestic audiences ] without causing too much damage.”

Additionally, the Chinese government has made some non-tariff announcements, one of which is an anti-monopoly research into US software giant Google.

It is questionable what the inspection will require, but for environment, Google’s search providers have been blocked in China since 2010.

The company continues to operate in the country by offering apps and games to Chinese markets through collaboration with local developers.

But China simply generates about 1 % of Google’s world income, which suggests if it cut ties fully with the land, it wouldn’t be much worse off.

China has listed PVH, the British business that operates Calvin Klein and Tommy Hilfiger, as its so-called “unreliable object” record and accused them of “discriminatory actions against Chinese companies.”

The record, which has different US companies on it, was created in 2020 by Beijing amid the heating up of business conflicts.

For Calvin Klein and Tommy Hilfiger, being on China’s record may make it harder to accomplish business in the country. They may experience restrictions, including charges, and having the work visa of their international staff revoked.

Officials will also go to companies of the companies to evaluate procedures, according to Andreas Schotter, teacher of global business at Western University in Ontario, Canada.

The US has its own “entity list,” which forbids a number of organizations from purchasing goods from US businesses without Washington’s approval.

” China is retaliating in the same way that President Trump accuses Chinese businesses.” This is all a result of US-China’s de-coupling, Prof. Schotter continued.

While tariffs have been imposed on businesses that import products from abroad, China has also imposed export controls on 25 rare metals.

For a lot of electrical products and military equipment, some metals are essential components.

China has mastered the art of producing almost 90 % of the world’s refined metals.

Wormwood, a scarce resource for the aerospace sector, is included in the restricted list.

While there are restrictions on exports, Mr Evans-Pritchard of Capital Economics, said it was notable that the critical metals China imports from the US, which are used to make high-end chips, semiconductor machinery, pharmaceuticals and aerospace equipment were not targeted in any measures.

Exports will decline sharply as a result of previous rounds of restrictions, which have been proven to be costly. Companies must now scramble to obtain licenses, a procedure that takes several weeks.

When it comes to the impact of the restrictions, it appears the US has a plan. Trump stated on Monday that he wanted Ukraine to provide more rare earth metals in exchange for$ 300 billion in support of Russia’s campaign.