China's Countermeasures Viewed as Inevitable

U.S. economists and trade groups maintain that China’s recent tariffs are a predictable reaction to the 10 percent tariffs implemented by U.S. President Donald Trump on Chinese imports, effective from Tuesday. Many industries in the U.S. hope to avoid a prolonged trade conflict that could strain economies.

China's tariffs, which will begin on February 10, include a 15 percent tax on specific coal and liquefied natural gas products, along with a 10 percent tariff on crude oil and agricultural machinery, as stated by China’s Ministry of Finance.

According to Thomas Fullerton, an economics professor at the University of Texas at El Paso, some U.S. companies may be adversely impacted by the actions taken by the Chinese government.

Experts suggest that both Trump's import tariffs and China's responses will likely force businesses and consumers to face higher costs amidst already tight financial conditions.

This is not the first time China has responded with countermeasures. In 2018, the Trump administration imposed tariffs ranging from 10 percent to 50 percent on approximately $283 billion worth of Chinese imports.

In retaliation during that year, China enforced a 25 percent tariff on $50 billion of U.S. goods, including pork and soybeans. This led to an estimated $27 billion loss in export revenue for U.S. agricultural producers between 2018 and 2019, based on data from the U.S. Department of Agriculture. A trade agreement was eventually reached in 2019.

In an effort to sidestep a new round of retaliatory tariffs, the agricultural sector is closely observing the actions of both countries in hopes of finding a resolution. "Farm Bureau members support the goals of security and ensuring fair trade with our North American neighbors and China, but we know from experience that farmers and rural communities will bear the brunt of retaliation," stated Zippy Duvall, President of the American Farm Bureau Federation.

Mary Lovely, a professor emeritus of economics at Syracuse University and a senior fellow at the Peterson Institute for International Economics, is cautiously optimistic about the agricultural sector's ability to withstand another trade confrontation. "In 2017/2018, U.S. agriculture faced substantial challenges. However, the agriculture industry may be less affected by a new trade war, as a reduced share of its exports now go to China,"she noted.

New Trade Measures

The U.S. does not export significant amounts of coal to China, only around 11.6 million metric tons projected for 2024 according to the West Virginia Coal Association, but the coal sector is following developments closely.

The Ministry of Commerce is also set to implement new export controls on various metal products, including tungsten, a key mineral in industrial and defense applications, as well as tellurium, used in solar cells. Additionally, China plans to investigate Google for alleged antitrust violations.

Both biotech company Illumina and fashion retailer PVH, which owns Calvin Klein and Tommy Hilfiger, will be placed on China's unreliable entities list due to violations of regular market trading principles.

The initial tariffs from China appear limited, covering $20 billion worth of U.S. imports, which represent about 12 percent of China's overall imports from the United States, according to estimates from research firm Capital Economics.

Several U.S. industries that have close ties with China are watching for further products that might be subjected to tariffs, which could impact them significantly.

Among the top Chinese imports into the U.S. in 2023 were $66.7 billion worth of smartphones, $53.1 billion in computers and accessories, and around $42 billion in electrical and industrial equipment.

Tiffany Smith, Vice-President of Global Trade Policy at the National Foreign Trade Council, emphasized that tariffs alone will not resolve the complex economic issues prevailing between the two largest economies in the world.

China, Tariffs, Trade