China's retaliatory import taxes on select American goods
took effect on Monday, marking an escalation in the ongoing trade war between
the world's two largest economies. This move follows US President Donald
Trump's threats to impose additional tariffs on various countries.
Beijing unveiled its countermeasure on February 4, shortly
after the US implemented a 10% levy on all Chinese imports. On Sunday, Trump
announced plans to impose a 25% tariff on all steel and aluminum imports into
the US, with a formal declaration expected on Monday. Speaking to reporters
aboard Air Force One en route to the Super Bowl, he also mentioned plans for
reciprocal tariffs against other nations, though he did not specify which ones.
China’s new tariffs on US goods include a 15% border tax on
American coal and liquefied natural gas products, along with a 10% tariff on
crude oil, agricultural machinery, and large-engine cars. Additionally, Chinese
authorities launched an anti-monopoly investigation into technology giant
Google last week, and PVH, the US company behind Calvin Klein and Tommy
Hilfiger, was added to Beijing’s "unreliable entity" list.
Furthermore, China has imposed export restrictions on 25 rare metals, essential
components for electrical products and military equipment.
Trump’s latest tariff announcement comes just days after he
negotiated deals with Canada and Mexico to avert 25% tariffs on all goods from
those countries. During his first term, he imposed similar measures, levying a
25% tariff on steel and 10% on aluminum, but later granted duty-free quotas to
select trading partners, including Canada, Mexico, and Brazil. The European
Union (EU) import taxes were not resolved until the Biden administration
assumed office.
On Sunday, there was no indication of whether exemptions
would be granted to certain countries under the new tariffs. Trump's proposed
reciprocal tariffs align with his campaign promise to impose equivalent tariffs
on nations that tax US goods at higher rates. He also suggested that vehicle
import taxes remained a possibility, citing concerns over the EU's
significantly higher tariffs on American cars compared to US levies.
Last week, Trump told the BBC that tariffs on EU goods could
be introduced "pretty soon" but hinted at the possibility of
negotiating a deal with the UK. Meanwhile, Beijing condemned the latest US
tariffs, accusing Washington of making "unfounded and false
allegations" regarding China's role in the fentanyl trade. In a complaint
to the World Trade Organization (WTO), China claimed the US tariffs were
"discriminatory and protectionist," violating global trade rules.
However, experts believe China is unlikely to secure a favorable ruling, as the
WTO’s dispute resolution panel remains non-functional.
Although Trump was expected to speak with Chinese President
Xi Jinping in recent days, he indicated no urgency in scheduling talks.
"China is much better prepared [than during Trump's first term],"
said Scott Kennedy, a Chinese business and economics expert at the Center for
Strategic and International Studies. "Despite their economy slowing
cyclically, their technological capabilities have significantly advanced, and
they have diversified trade and investment relationships."
Some of Trump’s policies implemented since taking office on
January 20 have undergone revisions. On Friday, he suspended tariffs on small
packages from China, including the additional 10% tariffs enacted on February
4. The suspension will remain in place until "adequate systems are in
place to fully and expediently process and collect tariff revenue." This
decision followed disruptions after the elimination of duty-free treatment for
shipments valued at less than $800 (£645), which left the US Postal Service
(USPS) and other agencies scrambling to adapt.
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