The Trade War Continues: China Hits Back with Tariffs on US Imports

After US president Donald Trump imposed tariffs on countries across the world earlier this week, it did not take much time for Beijing to return the favor.

The Chinese authorities said on Friday that the country would impose 34% tariffs on all imports from the US starting from April 10. This is on top of the tariffs already in effect.

All cargo loaded on ships before April 10 are not subject to the new tariff if the cargo arrives before May 13.

The tariffs are identical to the ones the US imposed on China on Wednesday. Before that Trump added two tranches of 10% additional duties on all Chinese imports, effectively subjecting Chinese goods entering the US to 54% tariffs.

China’s State Council Tariff Commission explained that the recent moves made by the US were not “in line with international trade rules” and that they “seriously undermine China’s legitimate rights and interests”. The Commission described Trump’s tariff policies as “a typical unilateral bullying practice”.

The new tariffs by China were accompanied by adding 11 US companies to an “unreliable entity list” such as drone manufacturers.

Beijing also put export controls on an additional 16 US firms to prohibit the export of Chinese dual-use items.

“We expect that these will negatively impact trade between both economies and hurt their economic growth,” said Niels Rasmussen, chief analyst at shipping association BIMCO, adding that the US agricultural sector is expected to be significantly impacted, as it accounted for 23% of exports worth $18.2bn.

For the dry bulk side, China’s tariffs are primarily expected to impact panamax and supramax segments.

Rasmussen noted that as the largest exported commodities, grains, coal and petcoke become comparatively more expensive, China will likely turn to other markets such as Brazil, Ukraine, Indonesia, Russia, Australia and Mongolia.

Tanker trades, however, may not see as great of an impact as China can turn to OPEC and Brazil to replace US volumes, which should also be able to find other willing buyers, he explained.

Rasmussen also warned that there is a risk that the compound effect of all recent tariff increases will cause economic activity to slow and “we may therefore see negative impacts that stretch beyond those caused directly by the tariff increases”.