china strikes back: tariffs levied on us goods amid rising trade tensions

2025-03-04 general

beijing, Tuesday, 4 March 2025.
in response to increased tariffs imposed by the trump administration, china has announced new tariffs ranging from 10% to 15% on select u.s. imports, effective march 10. the move is expected to hit agricultural products, including soybeans and corn. this action intensifies the ongoing trade dispute, potentially impacting global supply chains and u.s. companies. fifteen u.s. companies will be subject to export restrictions. the semiconductor industry, with key players like nvidia, asml and tsmc, may face increased costs and disruptions.

Market reaction and analysis

The announcement of these retaliatory tariffs has already sent ripples through the financial markets [3]. On march 2, 2025, u.s. stock indices experienced notable declines, with the dow jones industrial average falling by 1.4%, the s&p 500 dropping by 1.75%, and the nasdaq composite decreasing by 2.6% [3]. This market volatility reflects investor concerns about the potential impact of escalating trade tensions on corporate earnings and economic growth [3]. Frederique Carrier, head of investment strategy at rbc wealth management, notes that trade wars inherently carry the risk of retaliation and escalation, creating uncertainty for investors [1].

impact on agricultural sector

China’s tariffs will primarily target u.s. agricultural goods, imposing duties of 15% on corn and 10% on soybeans [1]. This move is a direct response to the trump administration’s tariffs, which have increased the average effective u.s. tariff rate on chinese goods to 33%, a significant increase from around 13% prior to trump’s latest term [1]. In 2023, u.s. exports of agricultural products, including soybeans, to china amounted to $22.3 billion, representing 1.2% of total u.s. exports [1]. These tariffs could significantly impact u.s. farmers and agricultural companies, potentially leading to decreased exports and revenue [4].

broader economic consequences

The ongoing trade war between the u.s. and china is expected to have broader economic consequences. The tax foundation estimates that tariffs imposed on china could reduce long-run u.s. gdp by 0.1% [6]. Moreover, if all of president trump’s proposed tariffs were implemented, the average tariff rate on all u.s. imports would rise to 13.8%, the highest level since 1939 [6]. Such measures could lead to reduced after-tax incomes for americans, potentially decreasing by an average of 1.7% in 2026 [6]. These tariffs also impact specific sectors; for example, tariffs on imported washing machines between 2018 and 2023 increased prices of laundry equipment by 34% [5].

china’s strategic response

China’s decision to retaliate with tariffs on u.s. goods demonstrates its resolve to protect its economic interests [4]. Lou qinjian, spokesperson for the 14th national people’s congress, stated that china will not accept pressuring or threatening [1]. In addition to tariffs, china is also implementing export restrictions on 15 u.s. companies, including leidos and general dynamics land systems [1]. These actions reflect a targeted approach to demonstrate displeasure with u.s. trade policies [1]. China’s state-backed global times had previously reported beijing’s consideration of retaliatory tariffs on u.s. agricultural products [1].

expert opinions and future outlook

Experts suggest that these escalating trade tensions could lead to further economic challenges [1]. Zichun huang from capital economics notes that growth is at risk of slowing this quarter, partially reversing the pick-up in the fourth quarter, even before the tariffs take full effect [4]. Despite the current challenges, analysts believe that beijing remains open to negotiations with the u.s. to de-escalate trade frictions [7]. However, with no current signs of trade talks, the prospect of improved relations between the two economic giants appears to be diminishing [7]. The coming weeks will be crucial in determining the future trajectory of this trade conflict [1].

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