The Diplomat
Overview
Rebutting Trump: China’s Retaliatory Tariffs
Depositphotos
China

Rebutting Trump: China’s Retaliatory Tariffs

The China-U.S. trade war is back with a vengeance.

By Nick Carraway

On February 1, 2025, U.S. President Donald Trump declared that all imports from China would be subject to a new 10 percent tariff, citing concerns such as fentanyl trafficking and intellectual property theft. This unilateral tariff increase came on top of existing tariffs on China, making another chapter in the ongoing trade war between the world’s two largest economies.

The move prompted a swift response from Beijing. Many observers noted that China is better prepared, having learned from previous encounters during Trump’s first administration. On February 10, China announced it would impose tariffs on a range of U.S. goods in retaliation.

Notably, China issued two lists of tariffs. The first list imposes a 10 percent tariff on crude oil from the United States. The U.S. exported $10.7 billion worth of crude to China in 2023, or 8.15 percent of its total exports, with China ranking as the third-largest destination after the Netherlands and South Korea. Meanwhile, U.S. exports accounted for less than 2 percent of China’s imports.

The 10 percent tariff list also includes over 50 types of agricultural machinery, from tractors to lawnmowers. The U.S. exported $33.7 billion worth of farm equipment and agricultural machinery to China in 2023, accounting for 64 percent of U.S. exports in this category. This will particularly affect top producers such as Caterpillar and John Deere.

Lastly, the list put tariffs on over 10 types of vehicles, most of which use spark ignition engines. Notably, U.S. electric vehicles (EVs), such as Tesla, were not included. This move aims to encourage China’s domestic consumption of EVs.

The second list, which imposes a 15 percent tariff, targets energy products such as LNG and various forms of coal. According to the Center on Global Energy Policy at Columbia University, while the immediate impact on the China-U.S. LNG trade is relatively small, both countries now have more at stake due to a surge in long-term LNG contracts signed between 2021 and 2023.

These new tariffs target sectors critical to U.S. exports to China, which were estimated to total $150 billion in 2023. This latest escalation brings the China-U.S. trade dispute to new heights, with major global economic implications.

The China-U.S. trade war has been a hallmark of the Trump administration’s economic policy, with tariffs serving as a primary tool to address what Trump sees as unfair trade practices. The United States first levied tariffs on Chinese imports in 2018, beginning with a 25 percent tariff on steel and aluminum. This move was framed as an effort to protect U.S. industries and reduce the country’s massive trade deficit with China, which stood at approximately $419 billion in 2018.

Since then, Trump has progressively expanded tariffs on Chinese goods. In 2019, the U.S. imposed additional tariffs of up to 25 percent on approximately $370 billion worth of Chinese imports, including electronics, textiles, and machinery. This strategy aimed not only to reduce the trade deficit but also to force China to comply with U.S. demands regarding intellectual property rights, technology transfers, and market access.

Fast forward to February 1, 2025, when Trump – back in office after a four-year hiatus – unveiled a 10 percent tariff on all Chinese imports. This time, the economic penalty was not tied to concerns about China’s trade practices, but to the United States’ opioid crisis, particularly fentanyl shipments from China.

The U.S. move on February 1 came amid reports that Washington was preparing to issue further unilateral tariff measures. This time, the targeted sectors include not just consumer goods but critical sectors like electronics, industrial machinery, and high-tech products, underscoring the importance of these tariffs as leverage in broader economic and geopolitical negotiations. In addition to the China-specific tariffs, Trump has announced a new 25 percent tariff on all foreign steel and aluminium purchases.

These tariffs mark a continuation of the Trump administration’s aggressive stance on trade, which is at odds with the principles of free trade and multilateralism championed by the World Trade Organization – a point often cited by Chinese leaders.

The tit-for-tat approach we have seen thus far is reminiscent of earlier rounds of the trade war, where both countries imposed tariffs on each other’s goods to exert economic pressure. On February 13, Trump introduced a new Reciprocal Trade and Tariffs policy, stating that the United States would match tariffs imposed by any foreign country. This move is seen as a direct challenge to global trade norms, and experts warn it could lead to widespread retaliation from countries seeking to protect their own industries.

Chinese leaders are drawing on global anxiety to shape their rhetoric, positioning China as a champion of trade and openness. In February, President Xi Jinping met with the leaders of major companies to instil confidence amid sluggish economic growth. He emphasized that building walls around small courtyards is not the right approach for great powers. Chinese media have particularly highlighted the cases of Mexico and Canada to express concerns over Trump’s “America First” approach.

Several Chinese reports are also urging European leaders to side with China in this trade war. China might meet limited success. While European countries have voiced concerns about the growing threat of protectionism, many are rerouting supply chains through India and Southeast Asia, rather than China.

The global economic ramifications of the China-U.S. tariff conflict are already being felt across industries and markets worldwide. Many experts have warned that continued tariff escalation could lead to a full-blown trade war, resulting in severe yet unpredictable disruptions.

Want to read more?
Subscribe for full access.

Subscribe
Already a subscriber?

The Authors

Nick Carraway is a Canada-based analyst researching China’s role in international relations.

China
What the US Aid Freeze Means for China
China
China’s ¥5.6 Trillion Real Estate Support Has Yet to Deliver. Here’s Why.