China has vowed to take all necessary countermeasures after U.S. President Donald Trump announced a fresh 10% tariff hike on Chinese imports.
CNBC reports that this latest escalation in the ongoing trade dispute between the world’s two largest economies has raised concerns over global market stability and potential economic ramifications.
The Chinese Ministry of Commerce, in a statement released on Friday, expressed firm opposition to the U.S. decision, warning of potential retaliatory measures.
“If the U.S. insists on its own way, China will take all necessary countermeasures to defend its legitimate rights and interests,” the Ministry stated, according to a CNBC translation.
The statement further urged Washington to reconsider its approach, emphasizing the importance of resolving conflicts through dialogue based on equality.
“We urge the U.S. side to not repeat its own mistakes, and to return as soon as possible to the right track of properly resolving conflicts through dialogue on equal footing.”
Timing and Implications
- The new tariffs, set to take effect on March 4, will coincide with the start of China’s annual parliamentary meetings, a period of heightened economic and political discussions in Beijing.
- These additional duties follow an earlier 10% tariff imposed by Trump on February 4, bringing the total tariff increase to 20% within a month.
- Trump justified the decision by citing China’s alleged role in the fentanyl crisis. The synthetic opioid, whose precursors are largely produced in China and Mexico, has been responsible for tens of thousands of overdose deaths in the U.S. annually.
Potential Chinese Retaliation
Economic analysts predict that China’s response will include higher tariffs on select U.S. imports, placing more American firms on its unreliable entity list, and possibly tightening export controls on critical minerals, a sector where Beijing holds significant leverage.
Neil Thomas, a fellow on Chinese politics at the Asia Society, noted that while Beijing’s reaction may be measured, it is expected to target strategic sectors.
“In the short term, China’s response will likely include raising tariffs on select U.S. imports, adding more American firms to its unreliable entity list, and potentially further tightening export controls on critical minerals,” Thomas said.
Alfredo Montufar-Helu, head of the China Center at The Conference Board, added that China’s response could be strategically designed to impact industries that are important to Trump’s voter base, keeping the door open for further negotiations.
He said China would prefer to leave some room for further negotiations as it hopes to avoid even higher import tariffs and other ‘corrective’ measures by Washington.
Previous Retaliatory Measures
China has a track record of targeting U.S. industries in retaliation to tariff hikes. Following the February 4 tariffs, Beijing responded by increasing duties on certain U.S. energy imports and placing two American firms on its unreliable entity list, limiting their ability to conduct business in China.
Additionally, China has increased restrictions on exports of critical minerals essential for U.S. industries, a move that could severely impact supply chains.
Stephen Olson, a visiting senior fellow at the Institute of Southeast Asian Studies and a former U.S. trade negotiator, highlighted the significance of China’s control over essential raw materials.
“The sharpest arrow that China has in its quiver would be to restrict U.S. access to critical minerals that can’t readily be sourced elsewhere,” Olson remarked.
The trade war escalation has raised concerns about potential disruptions in global supply chains and economic growth. China’s exports have remained a rare bright spot in its otherwise slowing economy, and with the U.S. being its largest single-country trading partner, both nations have a vested interest in preventing further economic downturns.