China has taken a significant step by adding PVH, the American company behind renowned designer brands Calvin Klein and Tommy Hilfiger, to its "unreliable entity" list. This move comes as part of China's broader strategy to counteract the blanket 10% tariff that former President Donald Trump imposed on all Chinese imports to the United States. This escalation in trade tensions highlights China's response to the ongoing economic struggle between the two global giants.
In a mirror to the US's "entity list," which restricts certain organizations from purchasing American products without Washington's approval, China has developed its own version. The list was initially created in 2020 amidst rising trade tensions, and now includes several US firms, with PVH being the latest addition. This move is part of a wider array of retaliatory measures that China has employed against the United States.
China has targeted specific American goods with retaliatory taxes worth approximately $20 billion, representing around 12% of its total imports from the US. Among these targets are agricultural machinery, pick-up trucks, and certain large cars, all subjected to a 10% tariff. Furthermore, China has imposed export controls on 25 rare metals. These actions are designed to match the intensity of the US tariffs, as China refines nearly 90% of global metal output.
"China is hitting back in the same way President Trump is accusing Chinese companies. This is all part of the US driven de-coupling of the US and China," stated Prof Schotter.
Despite these measures, experts like Julian Evans-Pritchard emphasize that China's retaliatory actions remain "fairly modest, at least relative to US moves." He points out that while China's targeted goods constitute a significant portion of its imports from the US, they are still "a far cry from the more than $450bn worth of Chinese goods being targeted by the US."
China's approach seems calculated to convey a message both to the US and domestic audiences without causing excessive harm to its own economy. Prof Schotter notes that China's actions have "clearly been calibrated to try to send a message to the US [and domestic audiences] without inflicting too much damage."
The energy sector also plays a crucial role in this trade conflict. While China has been increasing its imports of LNG from the US, nearly doubling since 2018, the overall fossil fuel trade remains modest. In 2023, US imports accounted for just 1.7% of China's total crude oil purchases from abroad. Meanwhile, China remains the world's largest coal importer, sourcing primarily from Indonesia, along with Russia, Australia, and Mongolia.
The US, as the world's largest LNG exporter, continues to have ample markets in other regions, including the UK and the European Union. Consequently, China's increased LNG imports from the US form part of a complex interplay in global trade dynamics rather than a direct conflict point.
Additionally, Google's search services have been blocked in China since 2010, reflecting long-standing digital and technological tensions between the two nations. This blockade exemplifies another facet of the ongoing struggle for technological supremacy that accompanies their economic rivalry.