China’s Tit-For-Tat Tariffs on the US Take Effect
China’s tit-for-tat tariffs on some US goods took effect on February 10. The trade war between the United States and China escalated as President Trump planned to impose tariffs on more countries.
Beijing announced the plan on February 4, minutes after new US levies of 10% on all Chinese products came into effect.
On February 9, Trump announced he would impose a 25% tariff on all steel and aluminium imports into the United States.
China’s latest titi for tit tariffs on US goods include a 15% border tax on imports of US coal and liquefied natural gas (LNG) products.
In addition, there is a 10% tariff on American crude oil, agricultural machinery and large-engine cars.
Last week, the Chinese government launched an anti-monopoly probe into technology giant G. At the same time, PVH, the US owner of designer brands Calvin Klein and Tommy Hilfiger, was added to Beijing’s so-called “unreliable entity” list.
China has also imposed export controls on 25 rare metals, some of which are key components for many electrical products and military equipment.
Trump’s intention to implement reciprocal tariffs would fulfil an election campaign pledge to levy tariffs at the same rates imposed on US goods.
He also said import taxes for vehicles remained on the table after reports he was considering exemptions to universal tariffs.
Trump has repeatedly complained that EU and Chinese tariffs on imports of American cars are much higher than US levies.
Tit-for-Tat Tariff: Google Investigation
China’s response did not stop with retaliatory tit-for-tat tariffs. Last week, authorities announced an antitrust investigation into Google.
China’s anti-monopoly regulator announced it had launched an investigation into Alphabet’s Google.
The Chinese regulator alleged that Google was suspected of violating the country’s anti-monopoly law, so it initiated an investigation into the company.
Google products, such as its search engine, are blocked in China, but it works with local partners, such as advertisers in the country.
‘Unreliable entities’
Beijing also announced it would add US fashion group PVH Corporation, which owns Tommy Hilfiger and Calvin Klein, and biotech giant Illumina to a list of “unreliable entities”.
According to the Chinese government, the move would “safeguard national sovereignty, security and development interests.
China alleges that the entity violated standard market transaction principles, interrupted everyday transactions with Chinese enterprises, and took discriminatory measures against Chinese enterprises.”
In a complaint with the World Trade Organization (WTO), China said the US import taxes were “discriminatory and protectionist” and violated trade rules.
However, experts have warned that China is unlikely to secure a ruling in its favour as the WTO panel that settles disputes remains unable to function.
What Next
China’s tit-for-tat tariffs signal trade war 2.0. During the last trade war, Beijing responded proportionally to tariffs on the average of all US imports.
This time around, it is different. While the US tariffs cover about $450 billion worth of Chinese goods, Chinese tariffs hit $15 billion to $20 billion in American goods.
The trade war is occurring amid a sluggish Chinese economy due to a real estate crisis, soaring debt, and deflation. However, China is ready for tit-for-tat tariffs because it has expanded its trade partners to over 120 countries.
