China Imposes Tariffs on US Products after Trump Tariff
China on February 4, imposed tariffs on multiple US imports in retaliation after warning of countermeasures and urging America to enter negotiations and “meet China halfway,”
As such, China announced that it would impose a 15% tariff on coal and LNG. Also, it would impose a 10% tariff on crude oil, agricultural machinery, and large-engine cars imported from the United States.
The US is the biggest exporter of liquid natural gas worldwide. However, China accounts for only around 2.3% of those exports, and its major car imports are from Europe and Japan.
The tariffs would take effect on February 10th.
In addition, China’s State Administration for Market Regulation stated that it would investigate Google on suspicion of violating antitrust laws.
In addition to the tariffs, China announced export controls on several elements critical to producing modern high-tech products.
These include tungsten, tellurium, bismuth, molybdenum, and indium. The US Geological Survey has designated many minerals as critical minerals essential to US economic or national security.
The export controls are in addition to those China placed on key elements such as gallium used in manufacturing in December 2024.
The Commerce Ministry also placed two US companies on an unreliable entities list: PVH Group, which owns Calvin Klein and Tommy Hilfiger, and Illumina, a biotechnology company with offices in China.
The listing bars them from engaging in China-related import or export activities and from making fresh investments in the country.
Who does China Blame?
President Trump accuses China of enabling fentanyl production, which is then made into tablets in Mexico. Thereafter, they are smuggled into and distributed throughout the US, which records some tens of thousands of overdose deaths from the drug annually.
In response, China says the US must hold itself to account instead of “threatening other countries with arbitrary tariff hikes”. Thus, it needs to solve its own fentanyl issue.
China’s Rationale
This calculated and selective targeting of goods may just be Beijing’s opening shot, a way of acquiring some bargaining power and leverage ahead of any talks.
President Xi might not want to fight Trump just yet, as he is busy trying to shore up his own ailing economy.
China is Washington’s chief economic rival, and the Trump administration has sought to isolate the country from major supply chains.
The US president is dealing with a far more confident China than he did back then. China has expanded its global trade network to more than countries.
The fear will be that President Trump is serious about increasing the percentage to the 60% he pledged during his campaign or will continue to use the threat of tariffs as leverage over China.
If that happens, Beijing will want to be ready, which means having a clear strategy in case this escalates.
Learning From the Previous Trade War
The last time the leaders signed a deal, it did not end well. The two countries issued tit-for-tat tariffs on hundreds of billions of dollars worth of goods in 2018.
It lasted over two years until China eventually agreed to spend an extra $200 billion (£161bn) a year on US goods in 2020.
Washington hoped the deal would bring down the massive trade deficit between China and the US. Unfortunately, the plan was derailed by the COVID pandemic and the deficit hit $388 billion in 2020, and $353 billion in 2021.
This time around, the Chinese economy is not as dependent on the US as it was in 2020. China has strengthened its trade agreements across Africa, South America, and Southeast Asia. It is now the largest trading partner of more than 120 countries.
The 10% tariff will sting, but Beijing feel it can absorb the blow for now.
What Other Issues May be Having an Impact on the Dispute
The US goods trade deficit, which reached a record $1.2 trillion in 2024, is a regular target of Trump’s complaints.
The US levy will sting, especially because it adds to a slew of tariffs Trump imposed in his first term on tens of billions of dollars of Chinese imports. China’s population is already concerned about its sluggish economy.
The Chinese domestic economy has failed to respond to various government-backed stimuli. At the same time, foreign infrastructure projects and other major government initiatives, which add to the country’s already high public debt, threaten further economic stagnation.
China is concerned about its relationship with the US and the harm a trade war could do to its slowing economy.
