The next phase of the trade war in China has begun

On February 1, US President Donald Trump announced That his government would be setting rates for China, Canada and Mexico due to alleged cooperation of coherent cooperation to prevent “fentanyl and other drugs from flowing to our country”. The rates came into force on February 4 at midnight.

The governments of Canada and Mexico both at least a temporary delay securedThe Trump administration on 3 February agrees to perform rates for 30 days in exchange for the enforcement of the storage brenger.

China was not lucky. From 4 February, all Chinese imports in the United States are subject to an extra rate of 10 percent – on top of the existing tasks and taxes entered under the previous Trump administration. A lot of Analysts have suggested that Trump’s Chinese rates are only a negotiating ship, intended as lever to close a final deal. But although Trump has a pattern of announcing rates and then withdraw them in response to concessions from other countries, his China rates have been different: the extra tasks that were levied on Chinese imports are still present during his first term .

Shortly after the rates were announced, a Chinese Ministry of Foreign Affairs said spokesperson That “China regrets firmly and resisting this step and will take the necessary countermeasures to defend his legitimate rights and interests.” The statement accused the United States of ‘Serious Struggle[ing] WTO rules, “Add,” Trade and Tarif rares have no winners. “

The game may not have winners, but China is determined not to lose. As the American rates entered into force, Beijing responded with its own punitive measures.

The Chinese Ministry of Trade announced on 4 February that China imposes new rates for certain entry from the United States. Coal and liquid natural gas will be subject to a rate of 15 percent, while crude oil, agricultural machines and large cars and pick-up trucks have 10 percent rates. The move was clearly linked in the official announcement to the use of rates of the Trump government against China.

As Reuters notedChina does not import much of his energy needs from the United States. In 2024, American sources were only 1.7 percent of the total import of crude oil in China for the year. US LNG contributed only 5.4 percent of the import of China, although the sale of the American LNG to China had grown. The United States is also not an important source of coal for China, 3 percent of the import of China.

In addition to determining its own rates, China also announced that it was a matter against the United States at the World Trade Organization (WTO). It is currently a completely symbolic gesture, because an American refusal to approve new jury members, has paralyzed the WTO dispute settlement mechanism. However, China allows it to claim the moral high land, as the Ministry of Commerce did in his Explanation about the WTO case: “China is a strong supporter and an important contribution to the multilateral trading system. We are willing to collaborate with other WTO members to jointly meet the challenges of the multilateral trading system by maintaining unilateralism and trade protection and the ordered and stable development of international trade. “

Separately, the Ministry of Commerce Announced new export controls On tungsten and 25 other rare earth metals. The official readout does not refer to the American rates or the export controls are part of the retribution, instead that the move was necessary to “better protect national security and interests” and to meet China’s non-proliferation obligations.

Nevertheless, China export checks are largely seen as politically motivated. The newest forbidden fits into a larger pattern of limiting the export of critical minerals to the United States, which used the overwhelming dominance of China when processing supply chains to keep access to materials in advanced technology.

China has also added two American companies – PVH Corp. and Illumina – to are unreliable entity listAgain apparently for reasons that are not related to the Trump rates. The two companies are accused of having taken “discriminatory measures against Chinese companies and to seriously damage the legitimate rights and interests of Chinese companies.”

Illumina is an American biotechnology company. PVH Corp is the parent company of the American fashion brands Calvin Klein and Tommy Hilfiger. It has Previously examined in China For alleged “discriminatory” against cotton produced in Xinjiang – a measure required by the American legislation, whereby companies must assume that goods and materials of Xinjiang were produced using forced labor unless otherwise proven.

As Xing Jiaying noted in a recent article for the diplomat, China shows a new willingness to use sanctions against American companies in a substantive – rather than pure symbolic – way. Beijing’s “recent efforts to use his dominance in important markets, such as drones and critical minerals, reflect a growing willingness to arm supply chains and impose economic costs on targeted entities,” wrote Xing. But there are limits, because China tries to prevent “overlap his hand” and to further disturb his own fragile economy.

This remark of caution is implicit in the statement of the Ministry of Trade on the additions to the list of unreliable entities. The ministry is well aware of the potential for the use of sanctions to be tackled to have a hair -raising effect on foreign investments. The statement is therefore terminated by stating that “China has always tackled the issue of the unreliable list of entity with caution and has focused only a very small minority of foreign entities that damages the national security of China, in accordance with the law. Fair and authority -abiding foreign entities have nothing to worry about. ‘

While the trade war is warming up, both the US and the Chinese companies will be worried.