Beijing has recently unveiled its new tariff on certain goods, along with launching an investigation into Google for alleged anti-trust violations. Export controls have also been placed on items linked to tungsten and rare earth elements crucial for high-tech products. Additionally, Illumina, a U.S. gene sequencing company, and PVH Corp., the owner of Calvin Klein and Tommy Hilfiger, will be added to China’s “unreliable entity list,” limiting their operations in the country.
Mainland Chinese markets are closed for the Lunar New Year holiday, while other Asia-Pacific markets mostly saw gains following news that Canadian and Mexican tariffs had been postponed. However, stocks in Hong Kong eased gains.
Beijing has brought the U.S. tariff measures to the World Trade Organization to protect its rights and interests, condemning the U.S. for violating WTO rules. China has criticized the U.S. for its unilateral trade actions and protectionist stance, emphasizing the detrimental impact on the global trading system.
China’s latest tariffs are more targeted compared to the U.S. tariffs, affecting specific industries and products. While some products may be less impacted, others like tungsten, crucial for chipmakers, could pose challenges due to limited alternative sources outside China.
The Chinese tariffs are seen as largely symbolic, covering a small portion of U.S. imports from China last year. This shift in strategy contrasts with China’s previous responses to U.S. tariffs during Trump’s presidency, as the country navigates economic challenges and seeks to avoid escalating conflicts.
Trump’s recent tariff announcements on China, Canada, and Mexico have caused tensions, with negotiations ongoing with the latter two countries. However, no resolution seems to have been reached with China yet. Trump is anticipated to discuss these matters with Chinese leader Xi Jinping in the near future.
“The White House press secretary Karoline Leavitt mentioned on Monday that China seems to be adopting a different strategy compared to Canada, Mexico, and Colombia, all of whom made concessions to the U.S. in order to avoid immediate tariff implementation. Alicia Garcia-Herrero, the chief economist for Asia Pacific at Natixis in Hong Kong, expressed her belief that waiting to negotiate with Trump could have potentially led to the avoidance of tariffs altogether if China had shown some willingness to compromise. President Trump explained that the 10% tariff on China was intended to exert pressure on Beijing to halt the trafficking of precursor chemicals from China to Mexico and other nations, where they are processed into fentanyl and then smuggled into the U.S. Both the U.S. and China have acknowledged Beijing’s actions in addressing the issue, yet China argues that the most effective way for the U.S. to combat its fentanyl crisis is to reduce domestic demand, emphasizing that tariffs could impact future collaboration in drug control efforts. The Chinese Embassy in Washington released a statement on Tuesday stating, ‘Fentanyl is a significant concern for the U.S., and out of goodwill and humanity, China has supported the U.S. in responding to this matter.’ President Trump warned on Monday that the 10% tariff was merely the beginning, hinting at the potential for significantly higher tariffs if a deal with China cannot be reached.”
