China ‘won’t be bullied’: Beijing slaps retaliatory levies on US agriculture goods

Beijing — China retaliated swiftly on Tuesday against fresh US tariffs with hikes to import levies covering $21bn worth of American agricultural and food products, moving the world’s top two economies a step closer towards an all-out trade war.

Beijing also slapped export and investment curbs on 25 US firms, on grounds of national security, but, unlike when it retaliated against the Trump administration’s February 4 tariffs, this time avoided punishing any household names.

“Trying to exert extreme pressure on China is a miscalculation and a mistake,” a foreign ministry spokesperson told a press conference in Beijing, adding that China had never succumbed to bullying or coercion.

The latest retaliatory measures came as the extra duty of 10% US President Donald Trump threatened for the world’s second-largest economy took effect at 5.01am GMT on March 4.

That makes for a cumulative 20% tariff in response to what the White House considers Chinese inaction over drug flows.

China has accused the White House of “blackmail” over its tariff hike, saying it has some of the world’s toughest anti-drug policies.

Analysts say Beijing still hopes to negotiate a truce on tariffs, deliberately setting its hikes below 20% to leave its negotiators room to hash out a deal, but each escalation reduces the chance of a rapprochement.

“China’s government is signalling that they do not want to escalate,” said Even Pay, an agriculture analyst at Trivium China.

“It’s fair to say we’re in the early days of Trade War 2.0,” Pay said, adding there was still time to avoid a protracted trade war if Trump and Chinese President Xi Jinping were able to strike a deal.

Later on Tuesday, China said it would investigate US producers of a type of optical fibre for circumventing antidumping measures, suspended the import licences of three US exporters, and halted China-bound shipments of US lumber.

The new US tariffs represent an additional hike to pre-existing levies on thousands of Chinese goods.

Some of these products took the brunt of sharply higher US tariffs last year under then president Joe Biden, including a doubling of duties on semiconductors to 50% and a quadrupling of tariffs on electric vehicles to more than 100%.

The 20% tariff will hit several major US consumer electronics imports from China that had previously escaped untouched, from smartphones and laptops to video game consoles, smartwatches, speakers and Bluetooth devices.

China responded immediately after the deadline, with an additional tariff of 15% tariff on US chicken, wheat, maize and cotton, as well as an extra levy of 10% on US soybeans, sorghum, pork, beef, aquatic products, fruits and vegetables and dairy imports from March 10.

The additional levies will hit about 15% of US exports to China or $21bn worth of trade, according to calculations based on US census data for 2024.

Beijing also added 15 US companies to its export control list that bars Chinese firms from supplying American companies with dual-use technologies.

It also put 10 US companies on its unreliable entity list for selling arms to Taiwan, which China claims as its own territory, though the self-governing island rejects that.

“We’re still on track to 60% (tariffs),” said Cameron Johnson, a supply chain expert at Tidalwave Solutions, referring to Trump’s campaign trail threat.

“At the moment, with 20%, it just barely moves the needle for companies wanting to move potential supply chains out of the country,” he added.

“At 35%, we start to see that companies will start to move or consider other strategies.”

China is the biggest market for US agricultural products, and the sector has long been vulnerable to being used as a punching bag at times of trade tension.

Chinese imports of US agriculture goods fell for a second year to $29.25bn in 2024, from $42.8bn in 2022.

China’s futures markets were steady on the news.

The most actively traded soymeal and rapeseed meal futures in the world’s biggest agricultural importer rose 2.5% on Monday after the Global Times said Beijing planned to target US agricultural exports.

Trade tension risks exacerbating US inflation and China’s efforts to ensure a durable post-Covid-19 economic recovery, which has been heavily reliant on exports.

On Tuesday, the US-China Business Council (USCBC) applauded Trump’s goal of tackling illegal trade in fentanyl, but said raising tariffs on Chinese products was not the way to achieve that goal.

“Across-the-board tariffs will hurt US businesses, consumers, and farmers and undermine our global competitiveness,” its president, Sean Stein, said in a statement.

All the same, the China-US trade war could benefit third countries.

Since the US and China imposed tit-for-tat tariffs during Trump’s first term, Beijing has moved to cut its reliance on American farm goods by spurring domestic production and buying more from countries such as Brazil.

US agricultural exporters could also step up efforts to replace the China market by shipping more to Southeast Asia, Africa and India.

“Chinese tariffs on US wheat and corn imports should be supportive for demand for Australian wheat and barely exports,” said Dennis Voznesenki, an analyst at Commonwealth Bank in Sydney.

“However, China’s recent slowdown in imports of feed grains from all origins should temper the excitement.”

Reuters