Minutes after President Trump’s latest tariffs took effect, the Chinese government said on Tuesday that it was imposing its own broad tariffs on food imported from the United States and would essentially halt sales to 15 American companies.
China’s Ministry of Finance put tariffs of 15 percent on imports of American chicken, wheat, corn and cotton and 10 percent tariffs on other foods, ranging from soybeans to dairy products. In addition, the Ministry of Commerce said 15 U.S. companies would no longer be allowed to buy products from China except with special permission, including Skydio, which is the largest American maker of drones and a supplier to the U.S. military and emergency services.
Lou Qinjian, a spokesman for China’s National People’s Congress, chastised the United States for violating the World Trade Organization’s free trade rules. “By imposing unilateral tariffs, the U.S. has violated W.T.O. rules and disrupted the security and stability of the global industrial and supply chains,” he said.
Mr. Trump has now tagged almost all goods from China with an extra 20 percent in tariffs since taking office in January. He announced 10 percent tariffs on Feb. 4 and another round on Tuesday. Mr. Trump also moved ahead on 25 percent tariffs on Mexico and Canada on Tuesday, after a monthlong delay.
China had responded to the February tariffs by immediately announcing that it would start collecting, six days later, additional tariffs on liquefied natural gas, coal and farm machinery from the United States. But those tariffs combined hit only about a tenth of American exports to China, making them much narrower than Mr. Trump’s comprehensive tariffs.
China’s action on Tuesday was much broader. China is the top overseas market for American farmers, wielding considerable influence over prices and demand in the commodities markets of the Midwest.
By targeting imports of food, Beijing repeated its response to tariffs that Mr. Trump imposed during his first term. China put tariffs on American soybeans in 2018 and shifted much of its purchasing to Brazil.
But the strategy backfired then: Mr. Trump responded by placing more tariffs on Chinese goods. Because the United States imports four times as much from China as it buys, China quickly ran out of American goods it could impose tariffs on. And American farmers had some success in finding other markets for their crops.
China’ tariffs in 2018 also had less of a political impact in the United States than Beijing’s leaders had hoped they would. Three of the top soybean-exporting states held elections for Senate seats in November 2018, but there was little evidence that voters held the Chinese action against Mr. Trump or the Republican Party. All three states saw Democratic senators replaced with Republicans that year, as social issues proved more compelling for many voters than trade disputes.
Yet China has potential trade weapons that go far beyond tariffs on food. In early February, Beijing implemented restrictions on exports to the United States of certain critical minerals, which are used in the production of some semiconductors and other technology products.
Blocking key materials from reaching the United States, a tactic known as supply chain warfare, carries considerable risks for China. Beijing is already struggling to attract foreign investment. China’s cabinet has publicly shifted its goal this winter from trying to lure more foreign investment to stabilizing it. China’s leaders have also stated that attempting to bolster the country’s domestic economy, weighed down by the fallout of a devastating real estate slowdown, is a priority.
Beijing could make it even harder for American companies to do business in China, but that could also hurt foreign investment. In addition to effectively preventing 15 companies from buying Chinese goods, China’s Ministry of Commerce added another 10 American companies on Tuesday to what it calls an “unreliable entities list,” preventing them from doing any business in China.
Many of the companies that China penalized on Tuesday are military contractors. But the Ministry of Commerce also blocked a biotech firm called Illumina from doing business in the country. It accused Illumina, which is based in San Diego, of violating market transaction rules and discriminating against Chinese companies.
Chinese market regulators said in early February, after Mr. Trump imposed tariffs that month, that they had launched an antimonopoly investigation into Google. Google has been blocked from China’s internet for more than a decade, but the move could disrupt the company’s dealings with Chinese companies.
Mr. Lou, the National People’s Congress spokesman, signaled his country’s emerging strategy in dealing with Mr. Trump’s tariffs by calling for closer trade relations with Europe.
“China and Europe can complement each other’s strengths and achieve mutual benefit in many areas of cooperation,” he said at a news conference ahead of the opening on Wednesday of the annual weeklong session of China’s legislature.
But Europe has its own trade disputes with China, notably over electric vehicles. European politicians and business leaders have voiced broad concern about how to cope with an expected further flood of exports this year from China, which has embarked on a far-reaching factory construction program.
China’s rapid rise since 2000 to global pre-eminence in manufacturing, with a third of the world’s output, has come to a considerable extent at the expense of the American share of global industrial production, according to United Nations data. European nations have been wary of closing factories and relying on low-cost imports from China.
Mr. Trump has moved much faster on China tariffs during his second term than he did in his first. In 2018 and 2019, he imposed tariffs of up to 25 percent, in stages, on imports worth about $300 billion a year. He then concluded a trade agreement with China in January 2020, leaving in place 25 percent tariffs on many industrial goods while cutting 15 percent tariffs on some consumer products to 7.5 percent and canceling a few other tariffs.
By contrast, Mr. Trump has now imposed 20 percent tariffs on all goods that the United States imports from China, worth about $440 billion a year. That includes some categories, like smartphones, that he omitted during his first term.
Mr. Trump’s actions this year have raised average tariffs on the affected Chinese imports to 39 percent — compared with just 3 percent before he took office in 2017. Apart from China, Canada and Mexico, the United States imposes tariffs averaging about 3 percent on most trading partners.
China’s average tariffs on goods from most of the world are twice as high, and much higher on imports from the United States.
In Mr. Trump’s first term, the Chinese government reduced taxes that it charges the country’s exporters. That gave them room to cut prices and offset at least part of the tariffs for their customers, which include many small American businesses as well as big retailers like Wal-Mart, Amazon and Home Depot.
As another way around tariffs, some Chinese exporters shifted the final assembly of their products to countries like Vietnam, Thailand or Mexico, while keeping the production of core components in China. Mr. Trump is now trying to stop some of the trade through Mexico, which critics see as a backdoor into the U.S. market.
Many Chinese exporters resorted to using the so-called de minimis exception to tariffs: dividing shipments into many packages, each with a value of less than $800. Each shipment is then exempt from tariffs and customs processing fees and mostly omitted from customs inspections and American imports data.
At least $1 of every $6 worth of American imports from China is now arriving through these de minimis shipments.
In early February, Mr. Trump issued an order briefly halting the de minimis tariff exemption for goods from China, Mexico and Canada. When piles of packages quickly accumulated at American airports, he delayed the order for shipments from China until procedures could be developed to handle them, and postponed for a month his order for de minimis imports from Canada and Mexico. On Sunday, he again delayed action on those imports from Canada and Mexico.
Alexandra Stevenson contributed reporting from Beijing and Chris Buckley and Amy Chang Chien contributed reporting from Taipei. Li You contributed research.
