Five ways China is opposed to US tariffs

The trade war between the two biggest economies of the world escalated after China opposed the introduction of tariffs by the US in its own measure.

Beijing is attempting to target certain American goods with retaliation taxes following the 10% tariff introduced by President Donald Trump on all Chinese imports into the United States.

In some respects, this latest Tit-for-Tat is not new, but is based on long-term trade disputes between nations.

Trump says he intends to talk to Chinese President Xi Jinping, so the deal could still be hit. However, if China proceeds as planned on February 10th, what will the impact be?

Part of China’s response to Trump’s tariffs is to announce its own import taxes on 10% US coal and liquefied natural gas (LNG) and announcing a 15% claim on crude oil.

The response from Beijing means that companies that want to import fossil fuels from the US must pay taxes to do so.

China is the world’s largest coal importer, while Russia, Australia and Mongolia are also one of their suppliers, but they have acquired most of them from Indonesia.

Regarding the US, China is increasing LNG imports from the country, at almost twice the level of 2018, according to Chinese customs data.

However, all of its fossil fuel trade is modest, with US imports accounting for just 1.7% of China’s total crude oil purchased from overseas in 2023. This suggests that China is not dependent on the US, so the impact of tariffs on the economy could be minimized. .

Rebecca Harding, trade economist and chief executive of the Economic Security Think Tank Centre, said China can easily source more supplies from Russia.

Conversely, since the US is the world’s largest LNG exporter, many other customers, especially the UK and the European Union.

Like fuel, China slaps 10% tariffs on agricultural machinery, pickup trucks and some heavy vehicles.

However, since China is not a large importer of US pickups, it has acquired a large portion of its cars from Europe and Japan, already 10% tariffs on a small number of imports have been hit so hard by consumers. Not there.

In recent years, China has increased its investment in agricultural machinery to strengthen production, reduce its dependence on imports, and strengthen food security.

Therefore, the introduction of tariffs on agricultural machinery could be another move to boost domestic industries.

Julian Evans-Pritchard, head of Chinese economics at Consultancy Capital Economics, said all tariff measures are “a lot less modest, at least compared to US movements.”

He suggests that China’s target goods amount to approximately $200 billion (£16 billion) of annual imports. This is about 12% of total imports from the US.

“This is far from the more than $4500 billion in Chinese products targeted by the US.”

However, he said China was “evidently proofread to try to send a message to the US (and domestic audiences) without causing too much damage.”

Chinese authorities have also announced several non-tariff measures, one of which is an exclusive counter-examination investigation into US technology giant Google.

It is unclear what the investigation entails, but for context, Google’s search service has been blocked in China since 2010.

The company still has a certain business presence domestically by working with local developers to provide apps and games to the Chinese market.

However, China produces only about 1% of Google’s global sales. This suggests that it’s not so bad if we cut ties with the country completely.

China has added PVH, an American company that owns designer brands Calvin Klein and Tommy Hilfiger to its so-called “unreliable entities” list and denounced it for “discriminatory measures against Chinese companies.”

This list includes other US companies, but was created by Beijing in 2020 amid an intensifying trade tensions.

For Calvin Klein and Tommy Hilfiger, being on the list in China makes it difficult to do business domestically. They face sanctions including fines and can cancel work visas for foreign employees.

According to Andreas Schotter, a professor of international business at Western University of Ontario, Canada, regulators also go to corporate factories to investigate their businesses.

The United States has its own “entity list,” which prohibits certain organizations from purchasing products from US companies without being approved by Washington.

“Join the same way that President Trump is blaming Chinese companies, China is fighting back. This is all part of the US-China coupling,” Professor Shotter added.

While tariffs are imposed on companies that want to import goods from overseas, China imposes export controls on 25 rare metals.

Some metals are important components of many electrical appliances and military equipment.

China has acquired the ability to refine such metals and produced almost 90% of the world’s refined production.

The restricted list includes tungsten, an important resource for the aerospace industry.

There are restrictions on exports, but capital economics’ Evans Pritchard clearly shows that important metals used by China to manufacture high-end chips, semiconductor machines, pharmaceuticals and aerospace equipment will be imported from the United States. He said that. All measures.

Previous experience with the restriction round suggests that exports drop sharply as companies scramble to obtain licenses. This is a process that takes several weeks.

As for the impact of restrictions, the US appears to have plans. On Monday, Trump said he wanted Ukraine to guarantee a more rare earth metal supply in exchange for $300 million in support in the fight against Russia.