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China Retaliates Against U.S. With Tariffs, Controls on U.S. Companies

Slate of measures, including tariffs on U.S. farm products, have been measured and targeted, suggesting Beijing is leaving room for talks with Trump

The Great Hall of the People in Beijing on Tuesday, before the opening ceremony of the Chinese People’s Political Consultative Conference. PHOTO: GREG BAKER/AGENCE FRANCE-PRESSE/GETTY IMAGES

The Great Hall of the People in Beijing on Tuesday, before the opening ceremony of the Chinese People’s Political Consultative Conference. PHOTO: GREG BAKER/AGENCE FRANCE-PRESSE/GETTY IMAGES

China hit back at the U.S. with a slate of retaliatory measures in response to the Trump administration’s latest tariff increase, escalating a trade war between the world’s two largest economies.

The coordinated action across government bodies—including a series of new tariffs on American products as well as controls on U.S. companies—was announced just as the White House’s additional 10% levy on all Chinese products came into effect.

Beijing said it would impose an additional 15% tariff on U.S. chicken, wheat, corn and cotton products, and an additional 10% tariff on sorghum, soybeans, pork, beef, seafood, fruits, vegetables and dairy products. The new tariffs from China are set to go into effect on March 10.

Simultaneously, the Commerce Ministry said it added more than two dozen American companies to export control and corporate blacklists and opened an investigation into the sale of certain optical fiber products by U.S. manufacturers. China said it has also filed a lawsuit with the World Trade Organization against the U.S.’s new tariff increase.

 

China is imposing an additional 10% tariff on U.S. products, including soybeans.
China is imposing an additional 10% tariff on U.S. products, including soybeans. PHOTO: DANE RHYS/REUTERS 

China’s burst of retaliatory measures comes after President Trump put an additional 10% tariff on Chinese imports on Tuesday on top of an extra 10% levy it placed on Chinese products last month. The U.S. leader has sparked fears of a protracted trade war, after hiking tariffs on Mexican, Canadian and China imports in response to what he says is a failure of those countries to fight the trafficking of fentanyl into America.

Analysts say China’s response so far to tariffs has been targeted and measured, signaling Beijing is prepared to counter Trump’s trade penalties while leaving room for negotiation.

“It’s still a very muted response to U.S. tariffs,” said ANZ Research senior China strategist Zhaopeng Xing. “It’s not a broad tariff on the U.S.”

China’s retaliatory agricultural tariffs put pressure on a major export market for U.S. farmers. China was the U.S.’s third-largest destination for agricultural exports last year, totaling about $24.7 billion in value, according to U.S. Department of Agriculture data. It is by far the U.S.’s largest buyer of soybeans, purchasing about $12.8 billion in 2024, according to the USDA.

On Tuesday, China’s Commerce Ministry unveiled a range of actions, signaling to the Trump administration that it could retaliate in asymmetrical ways.

The ministry added 15 American companies to an export control list, including Silicon Valley drone maker Skydio, as well as Andreessen Horowitz-backed artificial intelligence startup Shield AI, which makes AI-powered systems for drones. Inclusion on the list would prohibit Chinese export of dual-use items that can be used for both civilian and military applications to those companies.

Beijing also added 10 American companies to China’s “unreliable entity” list. These firms are prohibited from exporting or importing in China or from making new investments in the country, according to the commerce authority.

 

China’s Ministry of Commerce said it added 15 American companies to an export control list, including drone maker Skydio.
China’s Ministry of Commerce said it added 15 American companies to an export control list, including drone maker Skydio. PHOTO: CLARA MOKRI FOR WSJ

U.S. biotech company Illumina, which had been added to the “unreliable entity” list in retaliation for Trump’s first round of tariffs in February, will be prohibited from exporting gene sequencers to China, the ministry said in another statement.

Chinese authorities also opened a probe into some optical-fiber products from the U.S. over allegations that American companies might have circumvented Beijing’s antidumping measures.

China has also filed a lawsuit with the World Trade Organization against the U.S.’s additional 10% tariff on Chinese goods, according to the Commerce Ministry. That follows a dispute China raised with the WTO in February against the U.S.’s previous tariff increase.

Later on Tuesday, China’s customs agency said it was suspending imports of wood from the U.S., and U.S. soybean imports from three companies.

In February, China responded to the previous tariff increase with levies on select U.S. products, export controls on key minerals and an antitrust probe into Google.

Analysts said the Chinese response was partly symbolic.

Fourteen of the 25 American firms added to the export control and entity lists on Tuesday were already sanctioned by China’s Ministry of Foreign Affairs last year, a move the ministry said was linked to the U.S. agreeing to sell arms to Taiwan, a self-governed island Beijing views as its own territory. The sanctions meant the companies were blocked from doing business with China and would have any assets within China frozen.

“These sanctions are old wine in new bottles,” said Drew Thompson, a senior fellow at Singapore’s S. Rajaratnam School of International Studies. “Some of these companies have been sanctioned more than once.”

Thompson said the laws would have little impact, as American defense contractors have been prevented from selling technology and equipment to China by export controls for decades. Instead, the moves will likely push these companies to ensure their supply chains aren’t dependent on Chinese raw materials and components, he added.

Illumina said that it is assessing the effect on its China operations, adding the decision “does not ban Illumina from operating in China.” The country accounts for about 7% of the company’s revenue.

Chinese Foreign Ministry spokesman Lin Jian said Tuesday that if the U.S. “insists on launching a tariff war, a trade war or any other war, China will fight to the end.”

The latest retaliatory moves come as China is set to unveil its economic targets and policy priorities for 2025 on Wednesday during the country’s annual legislative session.

Most analysts expect China to maintain a target of around 5% growth in gross domestic product for this year, which would be a signal of resoluteness in the face of an escalating trade war with the U.S.

China is more dependent on exports as a driver of economic growth than it has been for most of the past two decades, making its economy vulnerable in an escalating trade war with the U.S

Chinese leader Xi Jinping has shown little interest in focusing solely on a deal about fentanyl, but aims to negotiate a broader agreement with Trump, according to people close to Beijing’s decision-making, The Wall Street Journal has previously reported. Beijing has been trying to put together an initial proposal that involves reinstating a trade agreement signed with the first Trump administration in early 2020, a renewed pledge not to devalue the yuan to help its exporters, and an offer to make more investments in the U.S., the Journal reported last month.

Chinese officials have said the country has done much to crack down on the drug and that the source of the American opioid crisis lies in the U.S.

Beijing effectively barred fentanyl production and distribution of fentanyl in 2019 under U.S. pressure, though U.S. officials say China has done less to curtail the supply of precursor chemicals used to make the drug and limit avenues for laundering the financial proceeds from its distribution.

Write to Hannah Miao at hannah.miao@wsj.com and Liza Lin at liza.lin@wsj.com

Author: Hannah Miao and Liza Lin

Source: WSJ:

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