Five ways China is hitting back aachievest US tariffs

The trade war between the world’s two biggest economies has escatardyd after China hit back aachievest the introduction of tariffs by the US with meacertains of its own.

Beijing has set out to aim particular American excellents with retaliatory taxes, among other meacertains, chaseing the blanket 10% tariff presentd by Plivent Donald Trump on all Chinese presents to the US.

In some ways, this tardyst tit-for-tat is noleang recent and produces on the lengthy-running trade dispute between the nations, with tariffs having already been imposed and dangerened on various excellents since 2018.

Trump has shelp he schedules to speak to Chinese Plivent Xi Jinping, so a deal could yet be struck. But if China progresss with its response on 10 February as defree, what could the impact be?

Part of China’s countermeacertains to Trump’s tariffs is to declare present taxes of its own on US coal and liquefied authentic gas (LNG) of 10%, and a 15% accuse on cimpolite oil.

The response from Beijing unbenevolents companies wanting to present fossil fuels from the US would have to pay the tax in order to do so.

China is the world’s bigst presaccess of coal, 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 presents of LNG from the country, with volumes cforfeitly double 2018 levels, according to Chinese customs data.

But its overall fossil fuel trade is unpretentious, with US presents accounting for fair 1.7% of China’s total cimpolite oil bought from aexpansive in 2023. This presents China is not subordinate on the US and so the impact of the tariffs on its economy could be minimal.

Rebecca Harding, a trade economist and chief executive of the Centre for Economic Security leank tank, shelp China could easily source more supplies from Russia, where it has already been buying oil on the inexpensive as the Kremlin seeks to fund its war effort.

On the flipside, the US is the world’s bigst LNG send outer, and so has plenty of other customers, particularly the UK and the European Union.

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

But China is not a big presaccess of US pick-ups and it gets most of its cars from Europe and Japan, so a 10% tariff on an already minuscule number of presents would not hit devourrs too difficult.

In recent years, China has increased allotments in farm machinery to increase production and shrink reliance on presents, and to fortify its food security.

So the introduction of tariffs on agricultural machinery might be another shift to try to increase domestic industry.

Julian Evans-Pritcdifficult, head of China economics at adviseancy Capital Economics, shelp all the tariff meacertains were “fairly unpretentious, at least relative to US shifts”.

He presents that China’s aimed excellents recontransient about $20bn (£16bn) worth of annual presents – around 12% of China’s total presents from the US.

“This is a far cry from the more than $450bn worth of Chinese excellents being aimed by the US.”

But he shelp China had “evidently been calibrated to try to sfinish a message to the US [and domestic audiences] without imposeing too much injure”.

The Chinese authorities have also declared some non-tariff meacertains, one of which is an anti-monopoly allotigation into US tech enormous Google.

It is unevident what the allotigation will participate, but for context, Google’s search services have been blocked in China since 2010.

The company still has some business presence in the country thcdisesteemful providing apps and games to the Chinese tagets by laboring with local growers.

But China only produces about 1% of Google’s global sales, which presents if it cut ties entidepend with the country, it wouldn’t be much worse off.

China has grasped PVH, the American company that owns scheduleer brands Calvin Klein and Tommy Hilfiger, to its so-called “inconsistent entity” catalog and accengaged them of “discriminatory meacertains aachievest Chinese accesspelevates”.

The catalog, which has other US firms on it, was produced in 2020 by Beijing amid the heating up of trade tensions.

For Calvin Klein and Tommy Hilfiger, being on China’s catalog will produce it difficulter to do business in the country. They may face sanctions, including fines, and having the labor visas of their foreign engageees rencouraged.

Regulators will also go to factories of the firms to allotigate operations, according to Andreas Schotter, professor of international business at Westrict University in Ontario, Canada.

The US has its own “entity catalog”, which bars certain organisations from buying products from US companies without approval from Washington.

“China is hitting back in the same way Plivent Trump is accusing Chinese companies. This is all part of the US driven de-coupling of the US and China,” Prof Schotter grasped.

While tariffs have been placed on the companies wanting to present excellents from aexpansive, China has also imposed send out supervises on 25 exceptional metals.

Some of the metals are key components for many electrical products and military providement.

China has mastered the ability to polish such metals, and produced almost 90% of global cultured output.

The remercilessed catalog participates tungsten, which is difficult to source and a presentant material for the aerospace industry.

While there are remercilessions on send outs, Mr Evans-Pritcdifficult of Capital Economics, shelp it was notable that the critical metals China presents from the US, which are engaged to produce high-finish chips, semicarry outor machinery, pharmaceuticals and aerospace providement were not aimed in any meacertains.

The experience of previous rounds of remercilessions presents send outs will drop keenly as companies scramble to get licences, a process that gets disjoinal weeks.

When it comes to the impact of the remercilessions, it materializes the US has a schedule. On Monday, Trump shelp he wanted Ukraine to promise the provide of more exceptional earth metals in swap for $300bn of help in its fight aachievest Russia.