By Aniket Chakraborty
Feb 5, 2025
Fossil Fuel Tariffs: China has introduced tariffs on US coal (10%), liquefied natural gas (LNG, 10%), and crude oil (15%). However, China is not heavily reliant on US fossil fuels, which may minimize the impact on its economy.
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Agricultural Machinery and Cars: Tariffs have also been placed on agricultural machinery, pick-up trucks, and some large cars, but these sectors are not major imports for China, reducing potential consumer impact.
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Message Sending: The targeted tariffs on specific goods are seen as a way for China to send a political message to the US and its domestic audience, without causing too much economic damage.
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“Unreliable Entity” List: China has added PVH, the parent company of brands like Calvin Klein and Tommy Hilfiger, to its "unreliable entity" list, making it harder for them to operate in China.
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Export Controls on Rare Metals: China has imposed export restrictions on 25 rare metals, crucial for electronics and military equipment, but not on materials critical for the US tech industry, like semiconductors.
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Limited Scope of Retaliation: China’s countermeasures are modest compared to the US’s $450bn worth of Chinese goods targeted, and they represent only about 12% of China’s total imports from the US.
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US-China Relations: Despite tensions, there are signs that both sides are open to talks. Trump and Xi have planned a call to try to resolve the standoff, though a deal will likely require concessions from both sides.
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Strategic Economic Shifts: China is now less reliant on international trade than it was in the past, with imports and exports making up 37% of its GDP. This reduces the immediate economic pressure from tariffs and gives China more flexibility to absorb the blow.
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