China's rapid tariff response shows Beijing is ready for Trump

Yahoo

05-02-2025

China retaliated with its own tariffs minutes after the US's tariffs went into effect on Tuesday.
The quick but measured response suggests that China has been strategic.
Tariffs on Mexico and Canada were delayed by a month after both countries struck a deal with Trump.
Beijing's announcement of retaliatory tariffs on US goods arrived on Tuesday. The news came fast, but with less punch than expected.
"China's tariffs are relatively measured and not symmetrical in scale, touching only an estimated $20 billion in US exports, compared with the more than $500 billion in Chinese exports that will be affected by US across-the-board tariffs," said Jeremy Chan, a consultant for Eurasia Group.
But analysts told Business Insider that the targeted and calibrated nature of the response doesn't mean Beijing is backing down.
"Clearly this is premeditated," Louise Loo, the lead economist for Greater China at Oxford Economics, told Business Insider.
The "carefully curated lists on specific goods simply imply, in our view, that China is prepared to retaliate as and when, rather than back down on aggressive tariffs from the US," she said.
Trump is dealing with a China that's showing restraint. Beijing has been calculated, strategic, and measured in its response, economists and foreign policy analysts told BI.
"China normally waits until measures are implemented, not when they are announced, to retaliate," said Eurasia Group's Chan. "In this instance, Beijing announced its response within minutes of the 10% tariff hike going into effect, showing that it was prepared."
Trump kicked off his trade war with China back in 2018, imposing tariffs on imports from China, like steel and aluminum. That resulted in a series of tit-for-tat responses between the US and China.
Austin Strange, an associate professor at the University of Hong Kong's department of politics and public administration, told BI that China's quick reaction shouldn't come as a surprise. Leaders have "hindsight from dealing with highly unpredictable policies during Trump's first term," he said.
The specific categories on China's tariff list were no accident.
"The restrictions on China exports of key minerals — iridium, molybdenum, etc. — is meant to retard development of a few strategic industries in the US, including solar panels, sophisticated weapons, and batteries," said Thierry Wizman, a global foreign exchange and rates strategist at Macquarie Group.
China's response to Trump's opening move was relatively measured, the analysts who spoke to BI agreed.
Chris Fasciano, the chief market strategist at Commonwealth Financial Network, said China's response seemed "designed to send a message" while not causing "too much damage."
"Through this lens their tariff response seems to be moderate in nature compared to the blanket 10% tariffs implemented by the Trump administration," Fasciano said.
China's tariffs included agricultural machinery, but not agricultural products.
In 2018, China slapped 25% tariffs on US soybeans, beef, pork, wheat, corn, and sorghum imports to retaliate against Trump's tariffs. China imported around $34 billion worth of US agriculture goods in fiscal year 2023.
Ian Ja Chong, an associate professor at the National University of Singapore, told BI that China's "more calibrated" opening move leaves room for "heavier measures later on."
"It suggests that Beijing may be ready to negotiate. Whether what each side offers the other is good enough is another matter altogether," Chong said.
These Trump-term tariffs are also hitting the Chinese economy in the midst of a prolonged downturn, which leaves Beijing with less wiggle room for retaliation.
To be sure, US tariffs on China did not go away when Trump completed his first term in 2021.
Then-President Joe Biden maintained Trump's tariffs and even expanded them. In May, Biden announced tariffs on $18 billion of Chinese goods. Besides targeting steel, aluminum, and medical products, Biden also raised tariffs on Chinese electric vehicles from 25% to 100%.
Against the combative backdrop of strategic geopolitical rivalry, Beijing has to show that it, too, can play the game.
"China has no choice but to be aggressive. The measures can always be reversed anyway, so it makes sense to be aggressive," Macquarie's Wizman said.
Read the original article on Business Insider