China slaps retaliatory tariffs on US farm products

China has swiftly retaliated against fresh US tariffs, announcing 10 per cent to 15 per cent hikes to import levies covering a range of American agricultural and food products, moving the world’s top two economies a step closer towards an all-out trade war.

Beijing also placed twenty five US firms under export and investment restrictions on national security grounds, but refrained from punishing any household names, as it did when it retaliated against the Trump administration’s February 4 tariffs.

In a press conference, China’s foreign ministry spokesperson Lin Jian said the country has never succumbed to bullying or coercion, and that “trying to exert extreme pressure on China is a miscalculation and a mistake.”

China’s latest retaliatory measures came as the extra 10 per cent duty US President Donald Trump threatened the world’s second-largest economy with last week entered into force on Tuesday, resulting in a cumulative 20 per cent tariff in response to what the White House considers Chinese inaction over drug flows.

China has accused the White House of “blackmail” over its tariff hike, saying it had some of the world’s toughest anti-drug policies.

Analysts say Beijing still hopes to negotiate a truce with the Trump administration, deliberately setting its tariff hikes below 20 per cent to leave Chinese negotiators room to hash out a deal, but each escalation reduces the chance of a rapprochement.

“China’s government is signalling that they do not want to escalate,” said Even Pay, agriculture analyst at Trivium China.

“It’s fair to say we’re in the early days of Trade War 2.0,” Pay added, noting that there is still time to avoid a protracted trade war if Trump and Chinese President Xi Jinping are able to strike a deal.

The new US tariffs represent an additional hike to pre-existing levies on thousands of Chinese goods.

Some of these products bore the brunt of sharply higher US tariffs under former president Joe Biden last year, including a doubling of duties on Chinese semiconductors to 50 per cent and a quadrupling of tariffs on Chinese electric vehicles to over 100 per cent.

The 20 per cent tariff will apply to several major US consumer electronics imports from China that were previously untouched, including smartphones, laptops, video game consoles, smart watches and speakers and Bluetooth devices.

China responded immediately after the deadline, announcing it will impose an additional 15 per cent tariff on US chicken, wheat, corn and cotton and an extra 10 per cent levy on US soybeans, sorghum, pork, beef, aquatic products, fruits and vegetables and dairy imports from March 10.

Beijing also added 15 US companies to its Export Control List, which prohibits Chinese firms supplying American companies with dual-use technologies, and 10 American companies to its Unreliable Entity for selling arms to Taiwan, which China claims as its own territory.

“We’re still on track to 60 per cent (tariffs),” said Cameron Johnson, supply chain expert at Tidalwave Solutions, referring to Trump’s campaign trail threat.

“At the moment, with 20 per cent, it just barely moves the needle for companies wanting to move potential supply chains out of the country,” he added.

China is a major importer of American farm products, though its purchases dipped after Trump launched a trade war during his first term as president, and then recovered.

Chinese imports of US agriculture goods fell for a second year to $US29.25 billion in 2024 compared to $US42.8 billion in 2022.

In 2021-22, the United States logged record export values to China for soybeans, corn, beef, chicken meat, tree nuts, and sorghum. Cotton exports to China also rebounded, according to the US Department of Agriculture.

US farm exports to China totalled $US33.8 billion in fiscal 2023 and $US36.4 billion in fiscal 2022.

The US-China Business Council (USCBC) on Tuesday applauded Trump’s goal of addressing the illegal trade of fentanyl, but said raising tariffs on Chinese products “is not the way to achieve that goal.”

All the same, the China-US trade war could benefit third countries.

Since the US and China imposed tit-for-tat tariffs during Trump’s first term, Beijing has taken steps to reduce its reliance on American farm goods by promoting production at home and buying more from countries like Brazil.

“Chinese tariffs on US wheat and corn imports should be supportive for demand for Australian wheat and barely exports,” said Dennis Voznesenki, analyst at Commonwealth Bank in Sydney.

“However, China’s recent slowdown in imports of feed grains from all origins should temper the excitement.”

with AP