Shipping containers at the port in Nanjing, in China's eastern Jiangsu province on Feb. 4.STR/AFP/Getty Images
China announced a raft of measures targeting U.S. imports and companies Tuesday, minutes after new U.S. tariffs against China came into force, restarting a trade war between the world’s two largest economies.
On Saturday, U.S. President Donald Trump signed an executive order placing additional 10-per-cent tariffs on all Chinese imports, along with measures targeting Canada and Mexico, which were also due to be enacted just after midnight Tuesday.
Those tariffs were postponed following last minute negotiations between Mr. Trump and Mexican President Claudia Sheinbaum and Prime Minister Justin Trudeau. But while China had also called for dialogueBut while China had also called for dialogue, Mr. Trump told reporters on Tuesday that said he is in “no rush” to speak with Chinese President Xi Jinping adding that a call between the two leaders would happen “at the appropriate time.”
When asked about China’s retaliatory tariffs against the U.S., Mr. Trump said “that’s fine.”
In a statement Tuesday, China’s State Council said that in response, from Feb. 10, there would be a 15-per-cent tariff on U.S. coal and liquefied natural gas imports, and a 10-per-cent tariff on crude oil, agricultural machinery and some vehicles.
Separately, China also announced new export controls on key minerals, launched an anti-monopoly investigation into U.S. tech giant Google – whose Android operating system is widely used in China – and blacklisted Calvin Klein owner PVH and biotech company Illumina.
PVH has been under Chinese investigation since last year for allegedly boycotting cotton from the Xinjiang region, where U.S. lawmakers have raised concerns over forced labour, while Illumina is a leading provider of gene sequencing. The Commerce Ministry said the two companies were guilty of “discriminatory measures against Chinese enterprises” and had “damaged” the legitimate rights and interests of Chinese companies.
Beijing residents said they supported the countertariffs measure taken by China against the U.S. but worried about the economic situation spiralling. China has countered U.S. President Donald Trump’s tariffs on Chinese products with tariffs of its own on multiple U.S. imports, as well as announcing an anti-trust investigation into Google and other trade measures.
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Nick Marro, lead analyst for global trade at the Economist Intelligence Unit, said the initial U.S. levy would likely not affect Chinese goods too much due to the depreciation of the renminbi seen in the last year, and ongoing deflationary pressure in China.
“What that means is Chinese exporters are already selling their products at quite low price points,” he told The Globe and Mail. “And so higher U.S. tariffs might not actually be enough to make these Chinese products uncompetitive in the American market.”
However, Mr. Marro noted that this is likely only “the opening salvo of renewed trade hostilities,” which could see both sides ramping up pressure moving forward.
In a note Tuesday, Oxford Economics also said both countries’ measures were mostly “symbolic” for now, but warned “the trade war is clearly in the early stages.”
“The blanket-style of U.S. tariffs on Chinese goods (compared to the more industrial and machinery products-focused tariffs during the 2018/19 trade war) as well as the inclusion of stronger language around retaliation in U.S. policy documents imply a very high likelihood of further tariff rounds from the U.S.” wrote China lead economist Louise Loo.
Announcing it was filing a case against the U.S. at the World Trade Organization, China’s Ministry of Commerce accused Washington of undermining “the rules-based multilateral trading system,” disrupting the foundation of U.S.-China trade and economic co-operation, and “destabilizing global supply chains.”
“The U.S. has repeatedly prioritized unilateralism over multilateralism, drawing strong condemnation from many WTO members,” the ministry said in a statement, adding it would work with other countries “to jointly address the challenges posed by unilateralism and trade protectionism.”
Many observers have warned Mr. Trump’s already announced tariffs, and threats of further action against the European Union and other long-time partners of the U.S., could drive countries into a closer relationship with Beijing, something U.S. policy-makers say they want to prevent.
During Mr. Trump’s first term, the EU and China made significant progress on a comprehensive trade pact, but this stalled following the war in Ukraine and Beijing’s perceived support for Russia, as well as a renewed charm offensive from Washington under president Joe Biden.
When the Chinese government announced the U.S. tariffs Tuesday, China Daily, the main state-run newspaper targeting foreign audiences, was leading its website with two articles expounding the value of EU-China co-operation.
“As the United States shifts away from multilateralism toward unilateralism under its ‘America First’ policy, global trade faces the risk of fragmentation and instability,” wrote two researchers at a Ministry of Commerce-aligned think tank. “Both China and the EU support the multilateral trade system with the WTO at its core.”
With reports from Reuters