On Monday, Beijing kicked off a new round of tariffs on a range of American agricultural products, with China being their biggest international buyer. This marks another step in the growing trade tensions between the world’s two largest economies.
The Chinese authorities made this announcement shortly after President Trump, for the second time in his tenure, increased tariffs on Chinese imports. This new set of Chinese tariffs will add a 15% levy on U.S. goods like chicken, wheat, and corn, and a 10% levy on items such as soybeans, pork, beef, and fruit.
Beijing has clarified that any goods already shipped by Monday and imported by April 12 will not fall under these new tariffs.
During last week’s National People’s Congress, a spokesman highlighted that President Trump’s latest tariffs had caused disruptions in global industrial and supply chains, pointing to concerns about global economic stability.
In addition to the tariffs, China declared a ban on 15 American companies from purchasing Chinese products without special permission, which notably includes a drone manufacturer that supplies the U.S. military. Furthermore, another 10 U.S. companies have been restricted from conducting business within China.
Earlier in February, President Trump imposed a 10% tariff on virtually all Chinese imports, hiking it up to 20% last week. He indicated that part of his motivation was to pressure China into reducing the influx of the opioid fentanyl into the U.S.
At the same time, a 25% tariff was placed on goods from Canada and Mexico, although many of those were unexpectedly lifted just a couple of days later. Currently, Trump’s tariffs cover about $440 billion worth of Chinese goods, which has bumped up the average U.S. tariff on these products to 39%, from a mere 3% at the start of his administration. Contrastingly, the U.S. levy on imports from most other countries averages around 3%.
Despite these rising tensions, there are signs that both Washington and Beijing might be gearing towards a compromise. Last week, China’s commerce minister extended an invitation to his U.S. counterpart and the trade representative for a meeting. In addition, President Trump hinted last month that a fresh trade agreement with China could be in the cards.
This latest tariff move isn’t China’s first retaliation—after Trump’s February imposition of a 10% tariff, China also taxed items like natural gas, coal, and farm machinery from the U.S.
The U.S. has more leverage in this trade spat since American consumers buy a lot more from China than the reverse. This gives the U.S. a bit of an upper hand as they can respond to Chinese tariffs with ease. In contrast, China faces several economic challenges, including sluggish foreign investments and the fallout from a real estate slump.
Nonetheless, Beijing isn’t out of strategies just yet. Previously, China has reduced taxes on export-focused Chinese companies to help them lower prices, easing the impact of U.S. tariffs. Chinese companies have also shifted the final assembly of their goods to countries like Vietnam and Mexico, which have enjoyed relatively open trade with the U.S., even though President Trump has threatened tariffs on Mexican goods as well.
Moreover, Chinese firms have been taking advantage of the de minimis rule that spares packages worth $800 or less from tariffs. While Trump has attempted to curb this loophole, the complexity of enforcement has led to the initiative being largely put on hold.
