Five ways China is retaliating against U.S. tariffs
- Deepshikha maan
- Feb 4
- 3 min read
Deepshikha Maan, Jadetimes Staff
D. Maan is a Jadetimes news reporter covering Asia
China Strikes Back Against U.S. Tariffs: Key Measures and Their Impact
The trade war between the world's two largest economies has intensified, with China responding to U.S. tariffs by introducing its own countermeasures. Beijing has strategically targeted American goods with retaliatory taxes and other economic actions in response to the blanket 10% tariff imposed by President Donald Trump on all Chinese imports to the U.S.
While this latest escalation is a continuation of the long standing trade dispute that has been ongoing since 2018, a resolution remains uncertain. Trump has stated his intention to negotiate with Chinese President Xi Jinping, but if China proceeds with its planned countermeasures on February 10, significant repercussions could follow.
China’s Retaliatory Tariffs on U.S. Energy Products
One of China's key responses is the introduction of new import taxes on U.S. fossil fuels. These include:
A 10% tariff on U.S. coal and liquefied natural gas (LNG)
A 15% charge on crude oil
This move will make it more expensive for companies to import these resources from the U.S. However, China's dependence on U.S. fossil fuels is minimal. The country, the world’s largest coal importer, primarily sources coal from Indonesia, Australia, Russia, and Mongolia. Meanwhile, although China has increased LNG imports from the U.S. since 2018, these still represent only a fraction of its total energy imports.
Despite the tariffs, China can easily turn to alternative suppliers, particularly Russia, which has been selling oil at discounted rates amid its ongoing conflict with Ukraine. On the other hand, the U.S. remains the world's largest LNG exporter and has strong trade relationships with alternative buyers such as the UK and the European Union.
Tariffs on U.S. Agricultural Machinery and Automobiles
In addition to energy products, China has imposed a 10% tariff on agricultural machinery, pick up trucks, and some large cars imported from the U.S. However, the impact of these tariffs is expected to be limited:
Automobile imports: China does not rely heavily on U.S. pick up trucks or vehicles, as most of its car imports come from Europe and Japan.
Agricultural machinery: China has been investing heavily in domestic farm equipment production to enhance self sufficiency and food security, making reliance on U.S. imports less critical.
According to Julian Evans Pritchard, head of China economics at Capital Economics, these measures, while impactful, remain moderate compared to the sweeping tariffs imposed by the U.S.
China’s Non Tariff Measures Against U.S. Companies
Apart from tariffs, China has introduced several non tariff measures targeting American businesses, including:
Anti Monopoly Investigation into Google
Chinese authorities have launched an anti monopoly investigation into U.S. tech giant Google. While the specifics of the probe remain unclear, Google’s search services have been blocked in China since 2010. The company still maintains a limited business presence in the country through app distribution, but given that China accounts for only 1% of Google's global revenue, the financial impact is expected to be minimal.
Placing PVH (Calvin Klein and Tommy Hilfiger) on the "Unreliable Entity" List
China has added PVH Corporation, the parent company of Calvin Klein and Tommy Hilfiger, to its "unreliable entity" list, citing discriminatory actions against Chinese enterprises. Inclusion on this list could mean:
Regulatory investigations into the company’s operations in China
Sanctions, including fines and work visa restrictions for foreign employees
This move mirrors the U.S. government’s "entity list," which restricts American companies from doing business with certain Chinese firms without government approval.
China’s Export Controls on Rare Metals
China has implemented export controls on 25 rare metals, which are crucial components in electronics and military equipment. As the world leader in refining these materials, accounting for 90% of global refined output, China’s restrictions could have significant implications for global supply chains. Notable items on the restricted list include:
Tungsten, a critical material for the aerospace industry
Despite these restrictions, China has notably excluded critical metals imported from the U.S. that are essential for producing high end chips, semiconductor machinery, pharmaceuticals, and aerospace equipment.
The U.S. Response and Future Outlook
As China tightens its control over rare metals, the U.S. is looking for alternative sources. Trump recently suggested that Ukraine could secure rare earth metal supplies for the U.S. in exchange for $300 billion in aid to support its defense against Russia.
While tensions between the U.S. and China continue to rise, both sides appear to be carefully calibrating their actions to avoid excessive economic damage. With negotiations still on the table, the global economic landscape remains uncertain.
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