China has vowed to retaliate following President Donald Trump’s announcement of significant new tariffs on its exports to the United States, part of his radical overhaul of a century of American global trade policy.
On Wednesday, Trump unveiled tariffs of 54% on all Chinese imports into the US, a move that is set to reset relations and escalate the trade war between the world’s two largest economies.
China’s Ministry of Commerce stated early Thursday, "China firmly opposes this and will resolutely take countermeasures to safeguard its own rights and interests."
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The ministry criticized the tariffs as a "typical unilateral bullying practice," urging the US to cancel the tariffs and resolve differences through equal dialogue.
According to the statement, "The United States has drawn the so-called ‘reciprocal tariffs’ based on subjective and unilateral assessments, which is inconsistent with international trade rules and seriously damages the legitimate rights and interests of relevant parties."
Trump’s announcement increases existing tariffs on Chinese imports to a total of 54%, adding to previous duties of 20%. Since taking office in January, Trump has already implemented two rounds of additional 10% levies on all Chinese imports, justified as necessary to combat the flow of illicit fentanyl into the US.
During an address in the White House’s Rose Garden, Trump also announced an additional 10% duty on all imports to the US and several country-specific measures that will particularly impact Asian countries.
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In response to existing tariffs, some Chinese companies have relocated production to other Asian nations. However, with the new tariffs affecting these countries, Vietnam will incur a levy of 46% and Cambodian goods will face 49% tariffs.
Trump remarked, "I have great respect for President Xi (Jinping) of China, great respect for China, but they were taking tremendous advantage of us. They understand exactly what’s happening and … they’re going to fight."
Beijing responded moderately to the earlier rounds of tariffs from the Trump administration this year, implementing 10% or 15% duties on certain fuel types and agricultural products such as soybeans, wheat, and chicken.
Additionally, China has enhanced its measures to control exports, including critical minerals, and is targeting specific companies and sectors to exert pressure on American businesses.
A US-China ‘decoupling’?
The 54% minimum tariffs imposed by Trump are higher than many analysts anticipated and could fundamentally change relations between the two economies after decades of interdependence.
According to US government data, trade between the two countries was valued at an estimated $US582.4 billion ($AUD925 billion) in 2024.
Nick Marro, principal economist for Asia at the Economist Intelligence Unit, stated, "This is really going to refocus that question on US-China economic decoupling."
Trump’s actions may compel multinational companies with operations in China to reconsider their strategies, even as they explore other markets to diversify supply chains.
However, Marro cautioned that the process is "going to be difficult."
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According to Marro, "China is very embedded into global production networks ranging from finished goods to intermediate products to even the sourcing of raw materials, and so this is not going to be an easy or straightforward process."
Countries that Chinese and international firms have moved to in recent years, such as Vietnam and Cambodia, are also facing challenges from Trump’s tariffs, complicating considerations for companies.
The tariffs arrive at a challenging time for China’s slowing economy, prompting officials to ramp up efforts to boost weak domestic consumption in anticipation of a widening trade war.
Given extensive US grievances regarding China’s economic model, including the treatment of foreign businesses, use of state subsidies, forced localization of intellectual property, and technology transfers, further escalation could be on the horizon, according to Marro. "All of these triggers could lead us to even higher tariff rates," he added.
Tit for tat?
The existing US tariffs already include levies on hundreds of billions of dollars in Chinese imports.
Many of these duties date back to Trump’s first term, which initiated the first trade war with China, resulting in a "phase one" agreement that analysts argue Beijing did not fully implement. The Biden administration subsequently increased tariffs on additional Chinese goods, including a 100% tariff on electric vehicles last year.
China is expected to respond with precision this time, analysts suggest.
According to Craig Singleton, a senior fellow at the US-based Foundation for Defense of Democracies, "Rather than broad retaliation, expect a playbook of calibrated pressure: new tariffs on politically sensitive US exports like agriculture and industrial machinery, expanded use of the ‘Unreliable Entity List’ to target high-profile US firms, and selective export controls on critical inputs."
Singleton added, "If (Chinese leader Xi Jinping) refuses to engage, the pressure escalates. If he engages too soon, he risks looking weak. Neither (leader) wants to be seen as folding first, but delay could deepen the standoff."
As Trump’s sweeping actions disrupt US economic relationships with both allies and adversaries, analysts suggest Beijing might find some silver linings.
In recent weeks, Beijing has launched efforts to portray itself as a champion of global trade and a reliable partner for nations and companies from East Asia to Europe.
As the US becomes an "unpredictable partner," economies in East Asia like Japan, South Korea, and Taiwan may reassess their relationships with the US, a dynamic that could potentially benefit China, according to Jason Hsu, a senior fellow at the Hudson Institute and former legislator in Taiwan.
Hsu stated, "Japan and Korea, the bigger economies, are still in no position to retaliate against the US, but what they could do is quietly develop a relationship with China to re-engage and reassess market opportunities."
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