US agricultural exports, fuel, and manufactured goods are anticipated to face challenges due to China’s comprehensive retaliation against President Donald Trump’s significant tariffs, with both sets of measures expected to be implemented next week.
Following President Trump’s announcement of a new 34% tariff on imports of Chinese products, which increases the total rate imposed this year to 54%, China declared it would impose an equivalent across-the-board tariff on US goods, along with other countermeasures.
Previously, China focused its retaliation on specific industries in a “mirror response” to US export restrictions, noted Emily Benson from consulting firm Minerva Technology Policy Advisors.
However, its wider strategy revealed yesterday serves as a “pretty significant warning shot” to the Trump administration to refrain from further actions, she stated.
The United States exported nearly €132 billion in goods to China in 2024, significantly lower than the €401 billion it imported, according to data from the Commerce Department.
Key export sectors include electrical and electronic equipment, various fuels, as well as oilseeds and grains.
Nonetheless, China appears to be more confident in retaliating this time compared to Mr. Trump’s initial presidency, during which he engaged in an escalating tariff conflict with Beijing.
“While the US remains a crucial market, fewer firms are currently existentially reliant on US suppliers,” stated Lynn Song, chief economist for Greater China at ING.
She further mentioned that Beijing has also made strides toward achieving technological self-sufficiency.
“US farmers will face significant challenges,” remarked Wendy Cutler, vice president of the Asia Society Policy Institute.
Their agricultural exports to China could “become prohibitively expensive to remain competitive” due to China’s new tariffs, she explained.
The US exported around €13.96 billion in electrical machinery to China last year.
Soybeans, oilseeds, and certain grains constituted a major portion of US exports to China, totaling €12.23 billion last year, according to US trade data.
“China accounted for 52% of our (soybean) exports in 2024,” commented Scott Gerlt, chief economist of the American Soybean Association.
Considering the magnitude of its purchases, replacing China as a market is not straightforward, he added.
Soybean prices significantly dropped following the news announced yesterday.
Additionally, China imported €13.4 billion worth of various fuels and oils from the United States last year.
Tariffs could significantly impact the oil and gas industry in states like Texas, which along with Louisiana experienced a surge in exports to China in 2023, as reported by a US-China Business Council analysis.
Moreover, the US exported around €13.96 billion in electrical machinery to China last year, according to official trade statistics.
However, shipments of semiconductors have declined due to the expansion of US export controls on advanced technology.
In addition to tariffs, China has restricted exports of rare earth elements and taken action against US companies, including those involved in drone manufacturing and the defense and aerospace industries.
“China controls approximately 69% of rare earth element mining and about 90% of refining,” stated Benson from Minerva Technology Policy Advisors.
“This is likely to become a chokepoint moving forward,” she added, which could impact semiconductor manufacturing, as well as magnets, optics, and lasers.
“Some of these measures are, naturally, aimed at chips,” she noted.
As Washington and Beijing continue to utilize an expanding array of measures in their conflict, Benson cautioned that the US “is relatively vulnerable to these Chinese controls” without an industrial policy response that includes “a significant cash investment to scale up domestic production.”
