China Strikes Back: Imposes 15% Tariff on US Coal and Gas Imports, Escalating Trade War
The US-China trade war is heating up once again as Beijing retaliates against new tariffs imposed by former President Donald Trump. In a swift countermeasure, China has slapped tariffs on various US products and launched an antitrust investigation into Google, signaling a renewed economic battle between the world’s two largest economies.
China’s Response to US Tariffs
Following Trump’s decision to impose a 10% tariff on Chinese goods, Beijing responded with a 15% levy on US coal and liquefied natural gas (LNG) exports. Additionally, China imposed a 10% tariff on American oil and agricultural equipment, further intensifying trade tensions.
The Chinese government also took action against major US companies. PVH Corp., the owner of Calvin Klein, and US gene sequencing firm Illumina Inc. were added to China’s blacklist of restricted entities. Moreover, Beijing tightened export controls on tungsten-related materials, a move that could disrupt global supply chains.
China Justifies Retaliation
China’s Finance Ministry issued a strong statement condemning the US tariffs, stating:
“The US’s unilateral imposition of tariffs seriously violates the rules of the World Trade Organization. It is not only unhelpful in solving its own problems but also undermines normal economic and trade cooperation between China and the US.”
A Calculated Response to Minimize Internal Impact
President Xi Jinping’s strategy appears carefully calibrated to avoid major economic harm to China while demonstrating an ability to inflict damage on US industries. The retaliation specifically targets sectors that could disrupt critical supply chains, particularly in the technology and energy industries.
Market Reaction and Global Impact
China’s measured approach led to a relatively subdued reaction in global markets. Following the announcement:
- The US dollar rebounded.
- The offshore yuan weakened by 0.3%.
- Australian and New Zealand currencies, both closely tied to Chinese trade, fell nearly 1%.
- Other Asian currencies, including the Thai baht and Indonesian rupiah, saw minor fluctuations.
Experts Weigh In
Dylan Loh, an assistant professor of politics at Nanyang Technological University in Singapore, described China’s response as “measured and appropriate.” He noted:
“It allows Beijing to be seen as taking action without inviting further escalation. Beijing is likely observing the trade strategies of countries like Canada and Mexico to assess future moves.”
Retaliation Timing and Future Talks
China’s swift retaliation dashed hopes of an immediate resolution to the trade dispute. Trump had suggested a potential dialogue with Xi Jinping, but Beijing has not publicly responded.
This latest move comes amid ongoing tensions over technology access, territorial disputes, and trade agreements. US-China relations had been on a relatively stable trajectory since Xi and then-President Joe Biden met in San Francisco in November 2023. However, Trump’s recent actions have reignited economic hostilities.
China’s Strategic Targets: Energy, Tech, and Key Industries
China is a dominant global producer of tungsten, accounting for 80% of worldwide production. The metal, known for its high density and melting point, is a critical component in military applications, including armor-piercing missiles. By imposing export restrictions, China is signaling its willingness to leverage its dominance in rare materials as an economic weapon.
Meanwhile, PVH Corp., which also owns Tommy Hilfiger, has been under scrutiny in China since September for alleged involvement in boycotting Xinjiang cotton. Illumina, a leader in genetic sequencing, competes directly with China’s biotech giant BGI Genomics Co., making it a strategic target for economic pressure.
What’s Next for the US-China Trade War?
With Trump’s tariffs set to take effect, further escalation remains a real possibility. His executive order includes clauses that could increase tariffs if China retaliates—setting the stage for a prolonged economic showdown.
As global markets brace for potential disruptions, all eyes are on whether the two nations will engage in further negotiations or if this latest trade spat will spiral into a more aggressive economic conflict. Stay tuned for updates as this evolving situation unfolds.