On Monday, Beijing began implementing tariffs on various agricultural products from the United States, which happens to be China’s top foreign market. This move marks a further escalation in the ongoing trade conflict between these two global economic giants.
The Chinese government revealed the tariffs last week, shortly after President Trump increased tariffs on Chinese imports for the second time since taking office in January. The newly announced Chinese tariffs will impose a 15 percent levy on U.S. goods such as chicken, wheat, and corn, with a 10 percent tariff on items including soybeans, pork, beef, and fruits.
Beijing clarified that any goods dispatched before Monday and imported by April 12 would be exempt from these new tariffs.
A representative from the National People’s Congress, which is China’s annual legislative gathering, stated last week that Mr. Trump’s latest tariffs had “disrupted the security and stability of the global industrial and supply chains.”
The Chinese authorities have also announced a ban on 15 U.S. companies from purchasing Chinese goods unless special permission is granted, which includes a drone manufacturer that supplies the U.S. military. Furthermore, they indicated that an additional 10 U.S. companies have been blocked from operating in China.
In early February, Mr. Trump had enacted a 10 percent tariff on nearly all imports from China, which was then increased to 20 percent last week. He has stated that part of this initiative aims to pressure China into curbing the influx of the opioid fentanyl into the United States.
Additionally, Mr. Trump placed 25 percent tariffs on imports from Canada and Mexico last Tuesday, although he surprisingly suspended many of these tariffs just two days later.
He has now imposed 20 percent tariffs on around $440 billion worth of Chinese products the U.S. imports annually. The average tariff on affected Chinese imports has increased to 39 percent from 3 percent when Mr. Trump began his first term eight years prior. The tariff rates for the rest of the world, excluding China, Canada, and Mexico, average about 3 percent.
In spite of the recent escalations in the trade conflict between Washington and Beijing, both nations have indicated a willingness to find a compromise. Last week, China’s commerce minister expressed that he had invited his U.S. counterpart and the U.S. trade representative to discuss a potential resolution. Last month, Mr. Trump also mentioned that a new trade agreement with China was “possible.”
The tariffs imposed on Monday are not the first retaliatory measures taken by China in response to Mr. Trump’s trade policies. Following the introduction of 10 percent tariffs by the president in early February, China announced it would levy tariffs on natural gas, coal, and agricultural equipment imported from the U.S.
However, the U.S. has more options in this trade dispute because Americans buy significantly more products from China than vice versa. This discrepancy allowed the U.S. to respond more effectively after China implemented reciprocal tariffs on American goods during Mr. Trump’s initial term.
China is also grappling with multiple economic challenges, including reduced foreign investment and the consequences of a real estate downturn.
Nonetheless, China possesses various strategies for managing the ongoing trade tensions. Historically, it has reduced taxes for Chinese exporters sending goods to the U.S., allowing them to decrease prices and mitigate the impact of U.S. tariffs.
Chinese firms have also relocated the final assembly of some of their products to countries such as Vietnam and Mexico, which have traditionally maintained stronger trade relations with the U.S. However, Mr. Trump has been attempting to close this loophole by threatening to impose tariffs on Mexico.
Additionally, Chinese businesses have attempted to take advantage of the de minimis rule, which exempts packages valued at $800 or less from tariffs. While Mr. Trump has sought to crack down on this loophole, the execution of such measures has proven challenging, and he has largely put the effort on hold.
