China has announced new tariffs on a range of American products in response to ongoing trade tensions with the United States. Starting February 10, China will levy a 15% tariff on coal and liquefied natural gas products, and a 10% tariff on crude oil, agricultural machinery, and large-engine cars imported from the US. This decision comes as a countermeasure to the US's recent imposition of a 10% tariff on all Chinese goods entering the American market.
The backdrop of this development is the persistent US-China trade war, which has been impacting both nations' economies since 2018. The trade deficit between the US and China stands at $361 billion, highlighting the imbalance in trade where China sells nearly four times more goods to the US than it imports. As China counters with limited scope tariffs compared to the US's broader measures, it signals a strategic approach in maintaining economic stability.
China's economy heavily relies on trade, with imports and exports contributing about 37% to its GDP. Over the past two decades, China has been making efforts to reduce this reliance by boosting domestic production. Despite these efforts, the US remains China's largest trading partner, a relationship that has become increasingly strained due to the ongoing trade war.
In recent months, the US has sought to further limit China's participation in major supply chains, a move aligned with former President Trump's administration goals. Trump has even threatened to impose a 60% tariff on all Chinese goods heading into the US, a measure that could significantly impact China's economic landscape.
China, however, has been expanding its global trade footprint, emerging as the leading trade partner for over 120 countries. This expansion may provide some buffer against the impacts of restrictive US trade policies. Nevertheless, there are indications that China is open to dialogue. The White House has confirmed that President Xi Jinping and President Trump have scheduled a call later this week, suggesting potential for discussions aimed at de-escalating tensions.
While President Xi navigates these international challenges, he is also focused on addressing domestic economic issues. Analysts believe that Xi may prefer not to engage in further confrontations with Trump at this moment, as he is working on stabilizing China's economy amid these turbulent times.