What tariffs is China imposing on the US – and why are they significant?

What tariffs is China imposing on the US – and why are they significant?

Donald Trump’s 10% tariffs on Chinese goods have caused China to react quickly.

They went into effect at 05: 01 GMT on Tuesday, and moments later, China’s Ministry of Finance announced it would impose 15 percent tariffs on imports of US liquid natural gas (LNG) and coal and 10 percent levies on oil, farm equipment and some automobiles.

Beijing will begin imposing export controls on some rare earth minerals and metals, according to China’s Ministry of Commerce and its General Administration of Customs, which are vital to the growing US tech and green energy sectors. China also announced measures to protect some US businesses.

China’s economic countermeasures began on Monday despite US tariffs already having already been applied to it. This week, Trump is scheduled to phone Xi Jinping, the president of China.

During Trump’s first term as president, China and the US also waged economic warfare in the form of tit-for-tat tariffs that upended the global economy. This time, Trump said he imposed tariffs on China over its role in the flow of fentanyl, a powerful synthetic opioid, into the US.

What effects do China’s tariffs have on the US? What can the Trump case study of the potential repercussions of the rebuttal by China tell us?

What happened with Canada and Mexico, and how does it apply to China?

On Saturday, the same day that Trump announced tariffs on China, he also declared that the US would impose 25 percent tariffs on goods coming to the US from its two neighbours, Canada and Mexico.

He also alleged that the two neighboring countries did not do enough to stop illegal immigration to the US over their borders, in addition to the accusation of ignoring the flow of fentanyl into the US.

Retaliatory tariffs were immediately imposed by Mexico’s president, Claudia Sheinbaum, while Canadian Prime Minister Justin Trudeau announced that his nation would implement matching 25 percent tariffs on nearly $100 billion in US goods.

Trump called both Trudeau and Sheinbaum on Monday to say he had agreed to a 30-day pause before the tariffs would go into effect, before the rhetoric and threats from the leaders of all three countries escalated.

Trudeau and Sheinbaum, for their part, said they had agreed to enhance efforts to enforce their borders.

Why does China only levy tariffs on Monday?

According to Lynn Song, chief economist for China at the Dutch financial firm ING, it appears that the Chinese president is giving diplomacy a chance as it did in the cases of Canada and Mexico.

He told Al Jazeera, “Delaying the implementation of the tariff until February 10 will allow for top level leadership to meet before then, which still gives both sides the chance to step back from the brink and de-escalate the situation.”

However, how Trump views China’s decision to threaten retaliatory tariffs will depend on the US, according to Julien Chaisse, a professor with a specialization in international economic law at City University of Hong Kong.

“If Trump sees this as a direct challenge, his administration could respond with additional trade restrictions. This would intensify the conflict”, he told Al Jazeera.

What is China’s ultimatum?

If diplomacy fails and China, the world’s largest consumer of energy, follows through on its threats to retaliate, the US will be hit with tariffs on its LNG, coal and crude oil in what Song called a “reasonably measured response”.

Additionally, PVH Corp, the holding company for Calvin Klein, and Illumina, a biotechnology company, are included on a list of potential companies that could face sanctions, according to China’s antimonopoly regulator, which also announced investigations into Alphabet’s Google.

Elon Musk’s Tesla, which has been advertising its electric trucks in China, may also be subject to a 10% tariff if it is imported from the US.

China’s decision to halt the export of crucial minerals and metals used in industries like solar panels, military equipment, and electronics comes at a time when Beijing is asserting its authority over these resources’ mining and processing.

The new controls, which came into effect immediately and are not subject to Monday’s deadline, cover the metals tungsten, tellurium, bismuth, indium and molybdenum and their related products.

China’s Commerce Ministry said this measure was to “safeguard national security interests”.

Exports are likely to decline sharply as businesses scramble to obtain export licenses, a process that typically takes six weeks. However, the controls do not impose a total ban. Whether US importers will be eligible for licenses is unknown.

According to Gary Ng, a senior economist with the investment bank Natixis in Hong Kong, “It is a response with equal magnitude but in a different way than in 2018,” the two nations engaged in a trade war between Trump’s 2017 and 2021 first term.

“This time, it is a mix of tariffs on targeted products, export control and restrictions on market access. This implies that China is trying to compete with the US by virtue of its position as one of the largest markets and producers in the world.

Xi is scheduled to have a phone call with Trump this week]File: Carlos Barria/AFP]

What is the potential fallout of China’s response?

According to Song, China’s actions against US imports only account for a small portion of the total goods it imports from the US, Song said. ING’s initial calculations put this figure at 10 to 12 percent based on data from 2024.

China imports 1.7 percent of its crude oil last year, which is a relative small portion of its total, or $ 6 billion, in the US. In 2024, it imported 230 or 540 barrels per day from the US, a 52% decrease over the same time period in 2023.

About 5.4 percent of China’s LNG imports come from the US, totalling 4.16 million tonnes last year and worth $2.41bn, customs data showed. Last year, China accounted for about 10% of US LNG exports.

These LNG purchases, however, are nearly double what they were in 2018, the last time the US and China went toe to toe in a trade war.

China doesn’t need to depend heavily on the US for coal. Only 6.4 percent of US coal production goes to China, US export data showed.

China mining
Mining is conducted for rare earth minerals at the Bayan Obo Mining District in Inner Mongolia, China]File: Handout/Reuters]

The materials Beijing’s export restrictions have the potential to hurt the US even more.

Due to its extreme hardness, tungsten is used in the production of tools like cutting tools, armour plating, and artillery shells.

About 60 percent of tungsten consumed by the US goes towards tungsten carbide, used in construction, metalworking, and oil and gas drilling. In 2023, China accounted for roughly 80% of the world’s supply.

Also on this list are indium, critical in the production of phone and TV screens, and tellurium, bismuth and molybdenum, essential to things like metalworking.

Source: Aljazeera

234Radio

234Radio is Africa's Premium Internet Radio that seeks to export Africa to the rest of the world.