China and the Trump Administration are going tit-for-tat.
Following Trump’s already controversial tariffs on steel and aluminum announced earlier this month, the president directed the U.S. trade representative to level additional tariffs on $50 billion worth of Chinese imports on Thursday, in response to apparent intellectual property theft in China. The U.S. reportedly plans to impose new investment restrictions on China as well.
China responded in kind on Friday, announcing proposed tariffs on 128 U.S. products worth close to $3 billion. The goods include fresh and dried fruit, nuts, wine, ginseng, and steel pipes. Such items would be subject to a 15% tariff. Should the Chinese government deem it necessary, a second group of items, including pork, processed products, and recycled aluminum would draw a 25% tariff.
The government’s statement noted that such tariffs would only be levied should the two governments be unable to reach an agreement by the deadline (March 31, according to Bloomberg). Additionally, the second group of tariffs would only be implemented “after further evaluating the impact of the U.S. measures on China.” Not explicitly mentioned in the Ministry’s statement is that many of the tariffs could especially hit agricultural producers in areas that voted for Trump.
China also intends to seek legal action against the U.S. at the World Trade Organization.
After China’s announcement, the White House declared a temporary exemption for the EU, Argentina, Australia, Brazil, Canada, Mexico, and South Korea on steel and aluminum tariffs, implicitly highlighting the focus on China.
China reportedly has plans to unveil additional measures against the U.S., targeting key items such as soybeans, cars, or cotton, and potentially even technology products that are manufactured in China. Singling out these products would put pressure on U.S. technology companies and could particularly hurt agricultural areas across the U.S. China is a key trade partner for U.S. agriculture—it purchased close to one-third of American soybeans last year.
Asian and U.S. stock markets took a hit following the news, with the Dow Jones industrial average dropping nearly 3% on Thursday and Japan’s Nikkei index dropping close to 4% Friday.