China retaliates against Trump, imposes tariffs and blacklists of American companies

Minutes after President Trump’s latest tariffs came into effect, the Chinese government said on Tuesday it imposed its own extensive tariffs on food imported from the U.S. and would essentially stop selling to 15 U.S. companies.

The Chinese Treasury Department has a tariff rate of 15% on U.S. chicken, wheat, corn and cotton imports and 10% on other foods, ranging from soy to dairy products. In addition, the Department of Commerce said that unless otherwise specified, 15 U.S. companies will no longer purchase products from China, including Skydio, the largest UAV manufacturer in the United States and a supplier of U.S. military and emergency services.

China’s National People’s Congress spokesman Lou Qinjian blamed the United States for violating the World Trade Organization’s free trade rules. “By imposing unilateral tariffs, the United States violated WTO rules and undermined the security and stability of global industries and supply chains,” he said.

President Trump believes his tariffs are crucial to blocking the flow of fentanyl into the United States, a synthetic opioid that killed hundreds of thousands of people through overdose.

But the United States imposes tariffs on US dialogue and cooperation, “will deal a serious blow to Chinese Foreign Ministry spokesman Lin Jian.”

Since taking office in January, Mr. Trump has now had a 20% tariff mark on almost all Chinese goods. He announced 10% tariffs on February 4 and made another round on Tuesday. Mr. Trump also raised 25% tariffs in Mexico and Canada on Tuesday after a month of delays.

China responded to February’s tariffs, immediately announcing that it would start collecting, six days later, from the U.S. to additional tariffs on liquefied natural gas, coal and agricultural machinery. But these tariffs have suffered only one-tenth of the U.S. exports to China, which is much narrower than Mr. Trump’s overall tariffs.

China’s actions on Tuesday were much wider. China is the top overseas market for American farmers, and has had a considerable impact on the prices and demand of the Midwest commodity markets.

By targeting food imports, Beijing repeated its response to the tariffs imposed by Mr. Trump during his first term. China signed tariffs on U.S. soybeans in 2018 and transferred most of its purchases to Brazil.

But this strategy backfired at the time: Mr. Trump’s response was to impose more tariffs on Chinese goods. Because China sold far more to the U.S. than it purchased, it quickly ran out of U.S. goods to impose tariffs. American farmers have had some success in finding other crop markets.

In 2018, China’s tariffs also had less political impact in the United States than Beijing’s leaders hoped. In the 2018 Senate elections in three soybean outbreak countries, voters have little evidence that they have taken Chinese action against Mr. Trump or the Republican Party. All three states have seen Democratic senators replaced Republicans that year because social issues are more attractive to many voters than trade disputes.

However, China has potential trade weapons that exceed food tariffs. In early February, Beijing imposed restrictions on the export of certain key minerals used in the production of certain semiconductor and other technical products.

Blocking key materials from reaching the United States is a strategy called supply chain warfare that poses great risks to China. Beijing is working hard to attract foreign investment. China’s leaders also said that trying to strengthen the country’s domestic economy has been suppressed by the consequences of a devastating property slowdown, which is a top priority.

Beijing may make it more difficult for U.S. companies to do business in China, but it may also hurt foreign investment. In addition to effectively preventing 15 companies from buying Chinese goods, China’s Ministry of Commerce added an “unreliable entity list” of 10 U.S. companies on Tuesday to prevent them from doing any business in China.

Many of the companies China punished on Tuesday were military contractors. However, the Ministry of Commerce also blocked imports from biotech company Illumina. It accused Illumina, based in San Diego, of violating market trading rules and discriminating against Chinese companies.

Chinese market regulators said in early February that they had conducted an antitrust investigation into Google after Trump imposed tariffs. Google has been blocked from China’s internet for more than a decade, but the move could undermine transactions between companies and Chinese companies.

Mr. Lu, spokesman of the National People’s Congress, demonstrated his country’s emerging strategy by calling for close trade relations with Europe.

“China and Europe can complement each other’s strengths and achieve mutual benefit in many areas of cooperation,” he said in a press conference before opening at the weekly session of the Chinese legislature on Wednesday.

But Europe has its own trade dispute with China, especially on electric vehicles. European politicians and business leaders expressed concerns about how to deal with the expected overflow of exports in China this year, which has begun a far-reaching factory construction plan.

According to UN data, China’s rapid rise since 2000 to the outstanding effect of global manufacturing, with one-third of its output largely dependent on the price of the United States in global industrial production. European countries have been vigilant about closing factories and rely on China’s low-cost imports.

Mr. Trump’s tariffs on China during his second term are much faster than his first term. In 2018 and 2019, he signed up to 25% tariffs on imports worth about $300 billion a year. He then reached a trade agreement with China in January 2020 to impose a 25% tariff on many industrial supplies, while reducing the tariffs on certain consumer products to 7.5% and eliminating some other tariffs.

By comparison, Mr. Trump now imposes a 20% tariff on all goods imported by the U.S. from China, worth about $440 billion a year. These include some products he omitted in the first semester, such as smartphones.

Trump’s actions this year have raised the average tariff on affected Chinese imports to 39% – by comparison, just 3% before he took office in 2017. Except for China, Canada and Mexico, the U.S. imposes an average tax rate of about 3% on most trading partners.

China’s average tariffs on goods in most parts of the world are twice as high as that of goods imported from the United States.

During Mr. Trump’s first term, the Chinese government reduced taxes collected from exporters in the country. This gives them room to lower prices and at least offset their customer tariffs, including many small U.S. businesses as well as large retailers such as Walmart, Amazon and Home Depot.

As another way around tariffs, some Chinese exporters have moved the final assembly of their products to countries such as Vietnam, Thailand or Mexico, while retaining production of the core components of China. Mr. Trump is now trying to block some trade through Mexico, a backdoor to the U.S. market by critics of Chinese exports.

Many Chinese exporters resort to the so-called de minimis exception to tariffs: dividing the goods into many parcels, each with a value of less than $800. Then, each cargo is exempt from tariffs and customs processing fees and is mainly omitted from customs inspections and U.S. import data.

Now, at least $1 of every $6 imported from China comes through these minimum shipping.

In early February, Mr. Trump issued an order briefly halting the minimum tariff exemption on Chinese, Mexican and Canadian goods. After quickly amassing packages at U.S. airports, he delayed orders for shipping from China until programs could be developed to process them and delayed them by a month, when he imported De Minimis orders from Canada and Mexico. On Sunday, he once again postponed the action to import from Canada and Mexico.

Wu Xinbo, dean of the International Institute of Fudan University in Shanghai, said that now retaliation said: “China sends a strong signal to the Trump administration that unilateral tariffs are invalid – you have to sit down and talk to us and negotiate with us.”

Alexandra Stevenson Beijing report and Chris Buckley and Amy Chang Chien Taipei’s report. Li, you Contributed to the research.