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China Strikes Back: New Tactics Against Trump Tariffs in Escalating Trade War

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China counters Trump tariffs in latest trade war turn


China responded to President Donald Trump’s tariffs by imposing its own on select U.S. imports. This escalation comes alongside an antitrust investigation into Google and other regulatory actions, as tensions between the two nations rise.

Meanwhile, Trump had temporarily paused U.S. tariffs on products from Canada and Mexico after they agreed to address his security concerns related to drug trafficking. This 30-day deferment highlights the ongoing negotiations as Trump prepares for discussions with China’s President Xi Jinping.

Experts describe China’s reactions as cautious but strategic. John Gong, a professor at the University of International Business and Economics, remarked, “They see the example set by Canada and Mexico and likely hope for a similar resolution.” However, the backdrop of a previous trade war in 2018 looms, during which both countries engaged in extensive tariff hikes.

China’s latest measures include a 15% tariff on coal and liquefied natural gas, along with a 10% tariff on crude oil and large-engine vehicles, set to begin next Monday. “The U.S.’s unilateral tariff increase seriously violates the rules of the World Trade Organization,” stated the State Council Tariff Commission. The commission emphasized that this approach hampers cooperative economic relations.

Despite these tariffs, the overall impact may be muted for U.S. exporters. While the U.S. is a leading liquid natural gas exporter, exports to China comprise just 2.3% of total shipments. The automotive sector also remains less affected, with the majority of China’s car imports originating from Europe and Japan.

Additionally, China has instituted export controls on critical minerals such as tungsten and indium. These minerals are integral to U.S. technological infrastructure, with potential ramifications for the U.S. economy. Philip Luck, a former State Department official, highlighted the vulnerability these supply chains face due to Chinese regulations.

The measured approach from China could indicate an intent to avoid further escalation. Stephen Dover of the Franklin Templeton Institute warned that ongoing tensions might be the precursor to deeper economic repercussions, including rising inflation and a stronger dollar.

On another front, China’s State Administration for Market Regulation launched an antitrust investigation into Google shortly after the tariff announcements. Google’s influence in China has been limited since its exit from the market in 2010, following censorship disputes and cybersecurity issues. The outcome of this investigation remains uncertain.

Moreover, two American firms—PVH Group and Illumina—have been placed on China’s unreliable entities list, effectively limiting their operations in the country. This action reflects ongoing scrutiny over U.S. companies, raising alarm among business leaders about government pressure to align with political stances.

The backdrop of these events suggests a complex web of economic and political maneuvering between the U.S. and China, with potential implications for global trade dynamics. Wu reported from Bangkok, with contributions from Zen Soo in Hong Kong and Christopher Bodeen in Taipei.