TLDR
- China has strongly opposed new US tariffs on Chinese products and vowed to take “all necessary countermeasures”
- Beijing announced tariffs up to 15% on US agricultural goods and banned trade with some US defense companies
- China’s response appears measured and targeted, avoiding major economic escalation
- The trade tensions come as Xi Jinping prepares for China’s biggest political meeting of 2025
- US-China relations remain strained with no direct communication between Trump and Xi since Trump took office
China has announced new tariffs on US agricultural products and restrictions on American defense companies. These moves come in direct response to Washington’s recent decision to increase tariffs on Chinese exports.
On Tuesday, Beijing expressed strong opposition to the latest US tariff increases. A spokesperson from China’s Ministry of Commerce urged the United States to “immediately withdraw the unreasonable unilateral tariffs” and called for a return to “equal talks to resolve differences.”
The Chinese government will impose tariffs as high as 15% on American food and agricultural products. These include chicken and cotton. Other products like soybeans, beef, and fruits will face a 10% tariff.
These new Chinese tariffs will take effect on March 10. The timing is important as it coincides with US farmers preparing to plant crops for the coming season.
Soybeans are a major export to China. Nearly half of US soybean shipments went to China last year. The announcement caused soybean futures to fall about 0.6% in Chicago.
Beyond tariffs, China has added 10 American companies to its “unreliable entity list.” Most of these companies are involved in defense work. The Chinese Ministry of Commerce also placed 15 firms, including defense contractors General Dynamics Land Systems and Skydio Inc., on an export control list.
China has also banned the import of gene-sequencing machines from Illumina Inc. This comes after China first added the company to its unreliable entity list in February, along with PVH Corp., which owns Calvin Klein.
China’s response is careful and measured
Experts see China’s response as careful and measured. “So far, China has given a measured, proportional response as they do not want to further escalate the situation,” said Henry Gao, a law professor at Singapore Management University who researches Chinese trade policies.
The Chinese countermeasures appear more limited than during the first trade war in 2018 and 2019. During that period, China imposed heavy tariffs on key US farm products. This caused sales of American soybeans to China to drop by almost 80% over two years.
The Chinese yuan has remained steady despite the trade tensions. This differs from the previous trade war when the yuan depreciated by 11.5%, helping offset some impact of US tariffs.
These developments come as Xi Jinping prepares for the government’s biggest political meeting of 2025. His officials are expected to unveil their economic blueprint for the year. Experts believe they will focus on boosting domestic consumption to offset expected losses in exports.
Chinese policymakers face important decisions about fiscal and monetary responses. Christopher Beddor, deputy China research director at Gavekal Dragonomics, noted: “We’re approaching a moment of truth, when policymakers will reveal how aggressively they’re willing to use fiscal and monetary stimulus in order to offset the blow from rising US tariffs.”
Trade tension extends beyond US-China
The trade tension extends beyond US-China relations. Trump has also imposed tariffs on Mexico and Canada. He is threatening further actions against the European Union and others. This creates uncertainty and rising costs for companies and consumers worldwide.
While financial markets have largely remained stable following the announcements, US equities had tumbled just before. Treasury note yields fell to the lowest in four months, and oil dropped to a three-month low.
Despite early signals from Trump about wanting to speak with President Xi, the two leaders have not had a call since Trump took office. A review of Beijing’s compliance with the first trade agreement is due in April, adding pressure for negotiations.
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