China responds to irrational tariffs with rational retaliation

China Plus Published: 2019-08-24 21:11:24
Share this with Close
Messenger Messenger Pinterest LinkedIn

Note: The following article is taken from the Chinese-language "Commentaries on International Affairs".

China announced on Friday that it would go ahead with promised additional tariffs on U.S. imports worth about 75 billion U.S. dollars. The additional tariffs, of either 10 percent or 5 percent, are to be introduced in two installments. The first installment will take effect on September 1, and the second on December 15. In addition, China will resume imposing additional tariffs of 25 percent or 5 percent on U.S.-made cars and auto parts starting December 15.

American-made Jeep Wranglers worth nearly 30 million U.S. dollars entering China via a port in Guangzhou in Guangdong Province on December 5, 2017. [Photo: VCG]

American-made Jeep Wranglers worth nearly 30 million U.S. dollars entering China via a port in Guangzhou in Guangdong Province on December 5, 2017. [Photo: VCG]

This response to a recently-announced U.S. tariff hike on goods from China is a necessary measure Beijing has taken to counter Washington’s unilateralism and trade protectionism. These new measures show once again that China will never bow to extreme pressure, and that it is willing to use precise and rational countermeasures in response to pressure from Washington.

A few hours later, the U.S. side threatened to raise its top tariff rate from 25 percent to 30 percent. This hasty and irrational reply shows that Washington is trying to play hardball after being caught off guard by China’s determined action. This is tantamount to bullying, and is a blatant double standard, as it’s not prepared to accept other countries using tariffs as a measure of protection.

American soybean farmers will be one of the biggest victims of Washington’s willful behavior. China has historically been the largest market for U.S. agricultural exports. In 2017, 57 percent of U.S. soybean exports were destined for China. But the figure has fallen to 17.9 percent since the U.S.-provoked trade frictions began early last year. After President Xi Jinping and President Trump reached a consensus at the G20 Osaka meeting in June, China resumed imports of U.S. soybeans according to its domestic demands. But the progress was again interrupted due to Washington’s backtracking on the consensus, which damaged the conditions necessary for carrying on with the terms on agricultural trade. According to U.S. Agriculture Department estimates, American soybean farmers are expected to be left with a record high level of ending stocks of over 1 billion bushels in the marketing year that ends on August 31.

American-produced crude oil has for the first time been included in the items targeted by China’s countermeasures. Last year, the United States became the world's largest oil producer, and China the third largest importer of U.S. crude oil, taking 11 percent of American crude exports. That share has dropped to 2.6 percent due to escalating trade tensions provoked by Washington.

Another sector to suffer is the American auto industry. The world's largest auto market, China had significantly reduced import tariffs on cars and auto parts since July 1 last year. But U.S. automakers and auto parts suppliers missed the opportunity and became a victim of multiple rounds of U.S.-ignited trade tensions. Late last year, China decided to suspend extra tariffs on U.S. vehicles and auto parts after the two heads-of-state reached a consensus during the G20 summit in Buenos Aires. But Washington kept escalating trade tensions by reneging on its word, which left China with no choice but to resume tariffs on U.S. cars and auto parts.

Shortly after Beijing’s announcement on Friday, White House trade adviser Peter Navarro claimed that the 75 billion U.S. dollars worth of tariffs “is not something for the stock market to worry about.” But the three major U.S. stock indexes dived right after the bourses opened for trading.

Mark Zandi, the chief economist of Moody’s Analytics, warned that the U.S. is already on the brink of a recession, and if Washington continues to put pressure on China without restraint, it will “push the economy off the rails.” According to Zandi, Moody’s Analytics daily calculation of the odds of a recession in the next 12 months has reached 45 percent, based on inputs like credit spreads and stock volatility.

China has repeatedly voiced its willingness to adopt a cooperative approach to resolving the China-U.S. trade dispute. By announcing new countermeasures, Beijing once again sent out a clear signal that it will never give ground on issues of principle.

Related stories

Share this story on


LU Xiankun Professor LU Xiankun is Managing Director of LEDECO Geneva and Associate Partner of IDEAS Centre Geneva. He is Emeritus Professor of China Institute for WTO Studies of the University of International Business and Economics (UIBE) and Wuhan University (WHU) of China and visiting professor or senior research fellow of some other universities and think tanks in China and Europe. He also sits in management of some international business associations and companies, including as Senior Vice President of Shenzhen UEB Technology LTD., a leading e-commerce company of China. Previously, Mr. LU was senior official of Chinese Ministry of Commerce and senior diplomat posted in Europe, including in Geneva as Counsellor and Head of Division of the Permanent Mission of China to the WTO and in Brussels as Commercial Secretary of the Permanent Mission of China to the EU. Benjamin Cavender Benjamin Cavender is a Shanghai based consultant with more than 11 years of experience helping companies understand consumer behavior and develop go to market strategies for China. He is a frequent speaker on economic and consumer trends in China and is often featured on CNBC, Bloomberg, and Channel News Asia. Sara Hsu Sara Hsu is an associate professor from the State University of New York at New Paltz. She is a regular commentator on Chinese economy. Xu Qinduo Xu Qinduo is CRI's former chief correspondent to Washington DC, the United States. He works as the producer, host and commentator for TODAY, a flagship talk show on current affairs. Mr. Xu contributes regularly to English-language newspapers including Shenzhen Daily and Global Times as well as Chinese-language radio and TV services. Lin Shaowen A radio person, Mr. Lin Shaowen is strongly interested in international relations and Chinese politics. As China is quite often misunderstood in the rest of the world, he feels the need to better present the true picture of the country, the policies and meanings. So he talks a lot and is often seen debating. Then friends find a critical Lin Shaowen criticizing and criticized. George N. Tzogopoulos Dr George N. Tzogopoulos is an expert in media and politics/international relations as well as Chinese affairs. He is Senior Research Fellow at the Centre International de Européenne (CIFE) and Visiting Lecturer at the European Institute affiliated with it and is teaching international relations at the Department of Law of the Democritus University of Thrace. George is the author of two books: US Foreign Policy in the European Media: Framing the Rise and Fall of Neoconservatism (IB TAURIS) and The Greek Crisis in the Media: Stereotyping in the International Press (Ashgate) as well as the founder of, an institutional partner of CRI Greek. David Morris David Morris is the Pacific Islands Trade and Investment Commissioner in China, a former Australian diplomat and senior political adviser. Harvey Dzodin After a distinguished career in the US government and American media Dr. Harvey Dzodin is now a Beijing-based freelance columnist for several media outlets. While living in Beijing, he has published over 200 columns with an emphasis on arts, culture and the Belt & Road initiative. He is also a sought-after speaker and advisor in China and abroad. He currently serves as Nonresident Research Fellow of the think tank Center for China and Globalization and Senior Advisor of Tsinghua University National Image Research Center specializing in city branding. Dr. Dzodin was a political appointee of President Jimmy Carter and served as lawyer to a presidential commission. Upon the nomination of the White House and the US State Department he served at the United Nations Office in Vienna, Austria. He was Director and Vice President of the ABC Television in New York for more than two decades.