News desk
- China targets US LPG, coal, crude oil and farm equipment exports
- Beijing may be better prepared this time: analysts
- Trade war likely to intensify
ISLAMABAD: China hit back at the US with retaliatory tariffs worth $14 billion on Sunday, pouring cold water on hopes that a trade war between the world’s two largest economies could be avoided.
On Sunday, the Chinese embassy in Washington announced that the tariffs were imposed in response to US President Donald Trump’s decision to impose an additional 10 per cent levy on Chinese products.
According to the Financial Times, China’s measures — which target US exports of liquefied natural gas, coal, crude oil and farm equipment as well as some automotive goods with levies of 10 per cent to 15 per cent — compared with the blanket US tariffs, were seen as creating space for negotiations to avert a wide trade conflict.
Tariffs come into effect
But in the absence of a deal by the deadline, the tariffs came into effect at 12:01 am Beijing time on Monday (11:01 am on Sunday in Washington DC).
Amid the intensifying trade war, Beijing last week announced an antitrust probe into Google and a US biotechnology company Illumina. It also blacklisted the holding company of US clothing brands Calvin Klein and Tommy Hilfiger.
The Financial Times also reported that China underlined its control of the rare earths supply chain by restricting exports to the US of five critical metals used in defence-related industries, solar panels, electric vehicle batteries and other green energy products.
China produces about 60 per cent of the world’s rare earths and accounts for 90 per cent of processing in the industry.
“Trump in no rush”
Financial markets had initially hoped Trump might follow the same playbook with China as with Canada and Mexico — against which he also announced tariffs, but then gave a month’s reprieve following last-minute talks with their leaders, the Financial Times said.
Trump had suggested he would speak with Chinese President Xi Jinping, but later said he was in “no rush” to do so.
Experts have suggested Beijing might have objected to Trump’s tactics, announcing the tariffs just two days before they came into effect, and before approaching Chinese officials for negotiations.
Expert opinion
Frederic Neumann, chief Asia economist at HSBC, told the Financial Times that many Chinese companies would be able to bear a 10 per cent tariff on their goods, given the country’s export prices had declined much more than those of rival producers over the past two years.
“If there was only a 10 per cent tariff on China and we left it at that, I think many investors would sleep more comfortably,” he added. “The big worry, of course, is this is a prelude to potentially larger trade restrictions.”
