Minutes after President Trump's latest tariffs came into effect, Beijing said Tuesday it was imposing its own tariffs on food imported from the US, essentially halting sales to 15 American companies.
China's Treasury has given 15% tariffs on 10% tariffs on American chicken, wheat, corn, cotton imports and other foods, from soy to dairy products. Additionally, the Commerce Department said 15 US companies will no longer be allowed to purchase products from China, except for special permits, including Skydio, the largest American manufacturer of drones and a supplier of US military and emergency services.
Lou Kinjian, a spokesman for China's National Congress, has accused the United States of violating the World Trade Organization's free trade rules. “By imposing unilateral tariffs, the US has violated WTO rules and disrupt the security and stability of global industry and supply chains,” he said.
Since taking office in January, Trump has now tagged almost every item from China with an additional 20% added in tariffs. He announced 10% tariffs on February 4th and another round on Tuesday. Trump also moved forward with 25% tariffs in Mexico and Canada on Tuesday after a month late.
China was responding to the February tariffs six days later by quickly announcing that additional tariffs from the US would begin collecting from the US. However, these tariffs are only about a tenth of exports to the US to America, much narrower than Trump's comprehensive tariffs.
China's actions on Tuesday were much broader. China is the top international market for American farmers, and has a major impact on prices and demand in the Midwest commodity market.
By targeting food imports, Beijing has repeatedly responded to the tariffs he imposed during his first term. China placed tariffs on American soybeans in 2018 and moved much of its purchase to Brazil.
However, the strategy backfired at the time. Trump responded by increasing tariffs on Chinese products. The US imports four times as much import as it buys from China, so China could quickly run out of American goods and impose tariffs. And American farmers managed to find other markets for their crops.
Also, China's tariffs in 2018 have less political impact in the US than Beijing leaders hoped. Three soybean exporters held elections for Senate seats in November 2018, but there was little evidence that voters were taking Chinese actions against Trump or the Republican Party. All three states saw Democrat senators replaced Republicans that year. Social issues have proven more persuasive for more voters than trade disputes.
However, China has potential trade weapons that go far beyond tariffs on food. In early February, Beijing implemented restrictions on exporting certain important minerals to the United States, which are used to produce several semiconductors and other technological products.
Blocking important material to reach the US, a tactic known as supply chain war poses considerable risks for China. Beijing is already struggling to attract foreign investment. China's Cabinet has shifted its target publicly to stabilize it as it seeks to attract more foreign investment this winter. Chinese leaders also say that trying to strengthen the country's domestic economy is overwhelmed by the devastating real estate slowdown, a priority.
Beijing could make it even more difficult for American companies to do business in China, but it could also hurt foreign investment. In addition to effectively blocking 15 companies from purchasing Chinese goods, the Chinese Commerce Department on Tuesday added another 10 American companies to what they called “unreliable entities lists,” preventing them from doing business in China.
Many of the businesses China was punished on Tuesday are military contractors. However, the Commerce Department has also blocked a biotech company called Illumina from doing business domestically. San Diego-based Illumina has accused Chinese companies of violating market trading rules.
China's market regulators said in early February that it launched an anti-Monopoly investigation into Google after Trump imposed tariffs that month. Google has been blocked from the Chinese internet for over a decade, and the move could disrupt the company's transactions with Chinese companies.
Lou, a spokesman for the National People's Congress, has set out his country's new strategy in dealing with Trump's tariffs by calling for closer trade ties with Europe.
“China and Europe can complement each other's strengths and achieve mutual benefits in many areas of cooperation,” he said at a press conference ahead of the opening of China's Parliament's annual weekly session on Wednesday.
However, Europe has its own trade dispute, particularly over electric vehicles. European politicians and business leaders have expressed widespread concerns about how to deal with this year's further flood of exports from China this year.
According to UN data, one-third of world production accounts for a third of world production and a third of world production, increasing rapidly to global excellence since 2000. European countries have been wary of closing factories and relying on low-cost imports from China.
Trump has moved much faster on Chinese tariffs than his first term. In 2018 and 2019, he imposed tariffs of up to 25% in stages on imports worth around $300 billion a year. It then signed a trade agreement with China in January 2020, introducing a 25% tariff on many industrial products, reducing the 15% tariff on some consumer products to 7.5%, and canceling several other tariffs.
In contrast, Trump currently imposes 20% tariffs on all goods imported by the United States from China, worth around $440 billion a year. This includes several categories, such as smartphones, which he omitted in his first semester.
Trump's actions this year have raised the average tariff on affected Chinese imports to 39%. The US, with the exception of China, Canada and Mexico, is leviing tariffs of about 3% on most trading partners, compared to just 3% before taking office in 2017.
China's average tariffs on goods from most parts of the world are twice as high, and much higher for imports from the US.
During Trump's first term, the Chinese government reduced the taxes it charges to country's exporters. This gave them room to lower prices and offset at least some of the customer's tariffs. This includes many small American companies as well as large retailers such as Wal-Mart, Amazon and Home Depot.
As another way around tariffs, some Chinese exporters have shifted their final gatherings of products to countries such as Vietnam, Thailand and Mexico, while maintaining production of core components in China. Trump is currently trying to stop some of his trade through Mexico. Mexico sees it as a backdoor to the US market by critics.
Many Chinese exporters have resorted to using so-called minimal exceptions for customs. Split the cargo into many packages each with values ​​below $800. Each cargo is then exempt from customs duties and customs processing fees, most of which are omitted from customs inspections and US import data.
At least one dollar is currently arriving through these minimum shipments for every $6 worth of US import from China.
In early February, Trump issued an order temporarily suspending De Minimis tariff exemptions on goods from China, Mexico and Canada. When a pile of luggage was quickly accumulated at American airports, he delayed the order of shipping from China until procedures to process them were developed, and postponed orders for minimum imports from Canada and Mexico for a month. On Sunday, he again delayed his actions against imports from Canada and Mexico.
Alexandra Stevenson Contributed with a report from Beijing Chris Buckley and Amy Chan Chien I contributed a report from Taipei. you Contributed research.
