Michael Race
Business Reporter, BBC News
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The trade war between the two largest economies in the world increased after China retaliated against the introduction of prices by the United States with its own measures.
Beijing has decided to target specific American goods with reprisal taxes, among other measures, following the 10% coverage rate introduced by President Donald Trump on all Chinese imports in the United States.
In some respects, this last tit-for-tat is not new and is based on the long-standing commercial dispute between nations, the prices having already been imposed and threatened on various goods since 2018.
Trump said he was planning to speak to Chinese President Xi Jinping, so an agreement could still be concluded. But if China is replying on February 10 as planned, what could be the impact?
Coal, oil and gas
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Part of the Chinese countermeasures at Trump prices are to announce its own import taxes on American coal and liquefied natural gas (LNG) by 10%, and a 15% burden on crude oil.
Beijing’s response means that companies wishing to import fossil fuels in the United States should pay the tax to do this.
China is the largest importer of coal in the world, but it obtains most of Indonesia, although Russia, Australia and Mongolia are also among its suppliers.
Regarding the United States, China has increased LNG imports from the country, with volumes near the 2018 levels, according to Chinese customs data.
But its overall fossil fuels trade is modest, American imports granting only 1.7% of the total crude oil of China bought abroad in 2023. This suggests that China does not depend on the United States and that The impact of prices on its economy could be minimal.
Rebecca Harding, Commerce economist and director general of the Center for Economic Security’s Center for Reflection Group, said China could easily get more Russian supplies, where it has already bought cheap oil while Kremlin is looking to finance his war effort.
On the other hand, the United States is the largest exporter of LNG in the world, just like many other customers, especially the United Kingdom and the European Union.
Agricultural machines, vans and large cars
In addition to fuel, China threw a 10% price on agricultural machines, vans and a few large cars.
But China is not a large importer of American vans and it obtains most of its cars in Europe and Japan, so a price of 10% on an already low number of imports would not hit consumers too much.
In recent years, China has increased investments in agricultural machinery to improve production and reduce dependence on imports and to strengthen its food security.
Thus, the introduction of prices on agricultural machines could be another decision to try to stimulate the national industry.
Julian Evans-Pritchard, chief of the China economy at Consultancy Capital Economics, said that all tariff measures were “quite modest, at least compared to American movements”.
He suggests that China’s targeted goods represent about $ 20 billion (16 billion pounds sterling) of annual imports – around 12% of total imports from China from the United States.
“It is far from the value of more than $ 450 billion in Chinese products targeted by the United States.”
But he said that China had “clearly been calibrated to try to send a message to the United States (and to the domestic public) without inflicting too much damage”.
Google probe
Chinese authorities have also announced certain non-tariff measures, one of which is an anti-monopoly survey on the American giant of Google technology.
We do not know what the survey will imply, but for the context, Google’s research services have been blocked in China since 2010.
The company always has a certain commercial presence in the country by providing Applications and Games to Chinese markets by working with local developers.
But China only generates about 1% of Google’s world sales, which suggests that if it reduced the links entirely with the country, it would not be much worse.
Calvin Klein added to the list of “unreliable entities”
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China has added PVH, the American company which has creative brands Calvin Klein and Tommy Hilfiger, to its so -called “unreliable entity” and accused them of “discriminatory measures against Chinese companies”.
The list, which contains other American companies, was created in 2020 by Beijing in the middle of heating trade tensions.
For Calvin Klein and Tommy Hilfiger, being on the Chinese list will make business more difficult in the country. They can face sanctions, including fines, and the fact that the work visas of their foreign employees have been revoked.
Regulators will also go to business factories to investigate operations, according to Andreas Schotter, international trade professor at Western University in Ontario, Canada.
The United States has its own “list of entities”, which prohibits certain organizations for purchasing products from American companies without Washington approval.
“China strikes in the same way as President Trump accuses Chinese companies. All this is part of the decoupling of the United States and China,” added Professor Schotter.
Export controls on rare metals
While prices have been placed on companies wishing to import goods from abroad, China has also imposed export controls on 25 rare metals.
Some of the metals are key components for many electrical products and military equipment.
China has mastered the ability to refine these metals and has produced almost 90% of the world’s refined production.
The restricted list includes tungsten, which is difficult to find and crucial equipment for the aerospace industry.
Although there are export restrictions, Mr. Evans-Pritchard of Capital Economics, said that it should be noted that the critical metals that China imported from the United States, which are used to make high fleas range, semiconductor machines, pharmaceutical and aerospace products were not targeted in all measures.
The experience of previous restrictions cycles suggests that exports will drop sharply as businesses are jostling to obtain licenses, a process that takes several weeks.
Regarding the impact of restrictions, it seems that the United States has a plan. Trump said on Monday that he wanted Ukraine to guarantee rarer land metals in exchange for $ 300 billion in support in his fight against Russia.
