China's Ministry of Commerce announced the addition of 10 new companies to its unreliable entities list, potentially imposing restrictions on their investment and trade with the country. This move comes in the wake of the United States implementing tariffs on China, covering over 10% of goods targeted in initial retaliation measures. Despite these actions, China's countermeasures remain measured, focusing primarily on tariffs instead of widespread trade restrictions.
The United States' tariffs on China have had a more substantial impact on its own economy compared to the reciprocal measures from China. The US's exports to China have grown by only 21% between 2017 and 2024, with the percentage of total exports dropping from 19% to 14.6%. Meanwhile, China has shifted its focus toward Mexico, with exports surging by 150% from USD 36 billion in 2017 to USD 90 billion in 2024.
China's Ministry of Commerce has taken a strategic approach by focusing on tariffs rather than imposing comprehensive trade restrictions. By adding 10 new companies to its unreliable entities list, China signals potential future restrictions without immediate impact. This list highlights companies that could face challenges in investing and trading with China, indicating Beijing's readiness to escalate if necessary.
The US tariffs, now in effect, include a 25% tariff hike on Mexican goods. This move is expected to have broader implications for the US economy than the retaliatory tariffs from China. With agricultural products accounting for USD 25 billion of US exports to China in 2024—around 15% of total exports—only a quarter of these exports have been affected by tariffs so far.
China's exports to Mexico have more than doubled since the pre-trade war baseline of 2017. As a percentage of total exports, they rose from 1.6% to 2.5% between 2017 and 2024. This growth underlines China's strategy of diversifying its export markets amid ongoing trade tensions with the US.
Additionally, China's outward direct investment into Mexico has increased significantly since 2018, totaling USD 2.6 billion in new investments between 2018 and 2023. If tariffs on Mexico persist, Chinese operations relocated there may face growing challenges.
The US's tariffs on China are impacting its economy more severely than China's tariffs are affecting the US economy. The drop in the percentage of total US exports to China—from 19% in 2017 to 14.6% in 2024—illustrates this trend. Conversely, China's strategic pivot towards Mexico demonstrates its resilience and adaptability in navigating complex global trade dynamics.