The ongoing trade tensions between China and the United States took a new turn this week as both countries announced further tariffs on each other's goods. China firmly rejected the additional U.S. tariffs on Chinese goods, which took effect Tuesday, and warned of countermeasures, according to a statement by the Ministry of Commerce. The White House has confirmed that these new duties amount to 10%, bringing the total new tariffs imposed in the last month to 20%.
China's annual parliamentary meeting, known as the "Two Sessions," commenced Tuesday, coinciding with these developments. This meeting is set to provide insights into China's annual gross domestic product target and fiscal stimulus plans for the year. As these discussions unfold, China has already taken retaliatory measures following a previous round of U.S. tariffs in February. These measures included increasing duties on certain U.S. energy imports and placing two U.S. companies on an unreliable entities list.
The Ministry of Commerce emphasized that the new U.S. duties would "hurt" U.S.-China trade relations and urged Washington to withdraw them. China's state-backed Global Times reported on Monday, citing a source, that Beijing was contemplating retaliatory tariffs on U.S. agricultural products. While Beijing has previously warned of countermeasures, specific details remain undisclosed.
U.S. exports of agricultural products, such as soybeans, account for the largest share of goods exported to China at 1.2%, or $22.3 billion, according to Allianz Research analysis. This sector's significance highlights the potential impact of China's potential countermeasures on the U.S. economy. Oil and gas rank second in U.S. exports to China, comprising 1% or $19.3 billion, while pharmaceuticals follow closely behind at 0.8% or $15.6 billion.
In response to the escalating trade tensions, China's state-backed media has suggested possible retaliatory actions on U.S. agricultural imports. This comes as the average effective U.S. tariff rate on Chinese goods is expected to reach 33%, up from about 13% before President Donald Trump began his latest term in January, according to estimates from Nomura's Chief China Economist Ting Lu.
The international community closely monitors these exchanges between the world's two largest economies, given their potential ramifications on global trade dynamics. Both sides have expressed strong positions, with China urging the U.S. to reconsider its tariff policies and Washington standing firm on its recent decisions.
Leave a Reply