China will impose additional tariffs of 10 to 15% on some U.S. imports starting on the 10th. In addition, it has implemented export controls on resources such as tungsten and has begun sanctions against U.S. corporations like Google. As the 10% tariff that the United States had planned to impose on Chinese imports becomes a reality, China has retaliated. Initially, the market expected China to persuade the U.S. considering its 'dialogue and cooperation' stance, but with the opposite approach taken, concerns have arisen that the U.S.-China trade war could intensify. However, most of these measures are interpreted as being 'symbolic' in nature, conveying a message from China to the U.S. to 'avoid the worst.'
According to state-run China Central Television (CCTV) on the 4th, the Tariff Policy Committee of the China State Council (hereafter referred to as the Tariff Committee) announced an increase in tariffs on certain U.S. imports. Accordingly, a 15% tariff will be imposed on U.S. coal and liquefied natural gas (LNG). A 10% tariff will be imposed on U.S. crude oil, agricultural machinery, large vehicles, and pickup trucks. This additional tariff measure will take effect starting on the 10th.
The Tariff Committee noted, 'On February 1, the U.S. government announced that it would impose a 10% tariff on all Chinese products imported into the U.S. due to issues related to fentanyl,' adding, 'The unilateral imposition of tariffs by the United States seriously violates the rules of the World Trade Organization (WTO) and does not help resolve its own problems, while undermining normal economic and trade cooperation between China and the United States.'
China also brought out the resource weaponization card. The Ministry of Commerce of China and the General Administration of Customs announced that they would implement export controls on rare minerals such as tungsten, tellurium, bismuth, molybdenum, and indium starting today. Notably, tungsten is considered essential not only for the defense industry, including missiles and aircraft, but also in the electronics and semiconductor industries. China controls 80% of the world's tungsten production. Bloomberg reported, 'The United States is in a difficult position as it imports more than a quarter of its tungsten from China,' adding, 'Other major suppliers include Russia, making it difficult to find alternatives.'
The spokesperson for the Ministry of Commerce stated, 'In accordance with the necessity of national security and interests, we have been conducting export controls on certain related items (previously). The addition of related items this time is aimed at better safeguarding national security and interests, fulfilling international obligations such as non-proliferation, and contributing to the security and stability of the global industrial supply chain.'
China has also aimed its sharp edges at individual U.S. corporations. On this day, the State Administration for Market Regulation of China announced that it has begun an investigation into U.S. information technology corporation Google for antitrust law violations. Although Google cannot operate its search business in China, it generates revenue from Chinese corporations advertising abroad. Chinese mobile phone manufacturers also use the Google Android operating system. Furthermore, the Ministry of Commerce announced that it would include the U.S. fashion company PVH Group, which owns brands such as Tommy Hilfiger and Calvin Klein, and the biotech company Illumina on its 'unreliable corporate list.'
The Ministry of Commerce stated, 'Both companies have violated the principles of normal market transactions, obstructed normal transactions with Chinese corporations, and taken discriminatory measures against Chinese companies, seriously undermining the legitimate rights and interests of Chinese companies.' Being added to the unreliable corporate list restricts transactions and investments within China and effectively makes corporate activities difficult, as the entry of employees into China is denied.
China's recent measures are retaliation for the United States beginning to impose an additional 10% tariff on Chinese imports starting at midnight (local time) on the 4th. Initially, China exhibited a relatively subdued response compared to Canada and Mexico, which were also mentioned as targets for tariff increases. Although it stated it would immediately file a complaint with the World Trade Organization (WTO), it emphasized its willingness to engage in 'dialogue and cooperation' with the U.S. In this context, The Wall Street Journal (WSJ) reported, citing sources, that China may propose 'carrots' to the U.S., including increased purchases of U.S. products, restrictions on the export of fentanyl precursors, and the sale of TikTok equity.
However, as China mobilizes resources weaponization and individual corporate sanctions in response to tariff countermeasures, projections regarding the future of the U.S.-China trade war are divergent. There is a viewpoint that tensions between the two countries will escalate further. Robin Sing, Chief Asia Economist at Morgan Stanley, said, 'The likelihood of an agreement (between the two countries) to avoid tariffs seems limited,' adding, 'The path to de-escalation remains narrow, and significant compromises will be required from both sides,' he told the Financial Times (FT). On the 3rd (local time), Trump also stated regarding China, '(This) tariff against China is a starting shot, and if we cannot reach an agreement, tariffs on China will increase.'
Conversely, there is also an opinion that the possibility of negotiations remains open. Bloomberg reported, 'China's (recent) move is intended more to send a message rather than to strike corporations or the U.S. economy.' As China does not import significant amounts of oil from the U.S., the impact of the tariff imposition will be limited, and it is explained that corporations on the 'unreliable corporations' list or Google, which is under investigation for antitrust violations, will not encounter significant restrictions on actual business activities. It may also be a measure considering the time for negotiations between the two countries, as the tariffs China will impose on some U.S. imports will take effect starting on the 10th. Bloomberg remarked, 'China's government response seems cautious,' stating, 'It signals that China aims to avoid the worst-case scenario of heightened trade tensions.'