China's Wholesale Response to Trump's New Tariffs
Ministry of Commerce, Market Regulation, Administration of Customs... what's next?
Today, Trump’s additional 10% tariff across all Chinese goods was enacted. China hits back with measures from various dimensions.
The Customs Tariff Commission of the State Council added a 15% tariff on coal and liquefied natural gas (LNG) and 10% on crude oil, agricultural machinery, large-displacement vehicles, and pickup trucks.
The response was not limited to the tariff section. Ministry of Commerce also issued export controls on Tungsten, Tellurium, Bismuth, Molybdenum, Indium and Related Items. It also added PVH Group and Illumina, Inc. to the Unreliable Entity List. Notably, this marks the first instance since the Unreliable Entity List mechanism was established in 2023 that entities added to the list were not accompanied by specific punitive measures. For example, in 2023, China included Lockheed Martin and Raytheon on the list alongside restrictions that effectively barred their operations in mainland China. In contrast, PVH Group and Illumina have only been listed without additional sanctions. I personally believe this suggests the move may leave room for further negotiations.
According to the commerce department regulation, the mechanism allows(not must) authorities to impose measures such as:
Restrict or prohibit their import and export activities related to China;
Restrict or prohibit their investments within China;
Restrict or prohibit the entry of their relevant personnel and means of transportation;
Restrict or revoke work permits, stay or residence qualifications of their relevant personnel in China;
Impose fines of corresponding amounts based on the severity of circumstances;
Other necessary measures.
The State Administration of Market Regulation also published a short news announcing they had launched an investigation into Google for suspected violations of the Anti-Monopoly Law.
In the press release today, the Commerce Department announced that they have filed a complaint against U.S. tariff measures through the WTO dispute settlement mechanism. (I’ve been to Google’s office in Beijing in 2022, where they provide advertising-related services to Chinese companies expanding into overseas markets.)
About the tariff issue, I was interviewed yesterday by Swedish finance media Dagens Industri for a short comment about how the Chinese companies responded to the new tariff. Here’s my full response:
In terms of Chinese business leaders, they have been preparing for tariffs
targeting China since Trump's first term. We saw car makers such as
BYD is building factories in Mexico to avoid tariffs toward China in the
past several years.
For now, I haven't seen a panic mode for Chinese businesses. They are
relatively calm for two reasons. First is the unexpected nature of the
new president. He can issue tariffs as a bargain during negotiations
and remove them when both sides are close to reaching a deal.
Overreacting might not be the best option.
Second, plenty of preparation has been made for the
potential tariff impact. In late 2024, Chinese businesses already
accelerated their exports to the US to minimize potential tariff
risks, which are now a reality. Other than placing production in
Mexico they are now targeting more diversified markets, especially
ASEAN countries with free trade agreements (10.5% increase in trade
volume in 2023).
If we say Trump's first term was like "Trump vs. China" to balance
trade, the second term is more like "Trump vs. all other nations."
Here, I have attached the detailed transcript of the response:
On February 1, 2025, the U.S. government announced a 10% tariff on all Chinese imports to the United States, citing issues related to fentanyl and other matters. The U.S. unilateral imposition of tariffs seriously violates World Trade Organization rules, not only fails to resolve its own issues but also damages normal China-U.S. trade cooperation.
In accordance with the Customs Law of the People's Republic of China, the Foreign Trade Law of the People's Republic of China, and other relevant laws and regulations, as well as basic principles of international law, with the approval of the State Council, additional tariffs will be imposed on certain imported goods originating from the United States effective February 10, 2025. The relevant matters are as follows:
A 15% additional tariff will be imposed on coal and liquefied natural gas. For specific scope of goods, see Attachment 1.
A 10% additional tariff will be imposed on crude oil, agricultural machinery, large-displacement automobiles, and pickup trucks. For specific scope of goods, see Attachment 2.
For imported goods listed in the attachments originating from the United States, the additional tariffs will be imposed on top of the current applicable tariff rates. The current bonded and tax reduction/exemption policies remain unchanged. The additional tariffs imposed this time shall not be reduced or exempted.
List
Attachment 1:
27011100 Non-agglomerated anthracite
27011210 Coking coal
27011290 Other non-agglomerated bituminous coal
27011900 Other non-agglomerated coal
27012000 Briquettes, ovoids and similar solid fuels manufactured from coal
27021000 Non-agglomerated lignite
27022000 Agglomerated lignite
27111100 Liquefied natural gas (LNG)
Attachment 2
https://www.mof.gov.cn/zhengwuxinxi/caizhengxinwen/202502/P020250204464880131371.pdf
In accordance with the Export Control Law of the People's Republic of China, Foreign Trade Law of the People's Republic of China, Customs Law of the People's Republic of China, and Regulations on Export Control of Dual-Use Items, and to safeguard national security and interests and fulfill international non-proliferation obligations, with the approval of the State Council, it is decided to implement export controls on the following items:
I. Tungsten-Related Items
(A) 1C117.d. Tungsten-Related Materials:
Ammonium paratungstate (Customs HS Code reference: 2841801000)
Tungsten oxide (Customs HS Code reference: 2825901200, 2825901910, 2825901920)
Tungsten carbide not controlled under 1C226 (Customs HS Code reference: 2849902000)
(B) 1C117.c. Solid tungsten with all of the following characteristics:
Solid tungsten (excluding particles and powder) with any of the following:
a. Tungsten and tungsten alloys with tungsten content ≥97% by weight, not controlled under 1C226, 1C241 (Customs HS Code reference: 8101940001, 8101991001, 8101999001)
b. Copper-infiltrated tungsten with tungsten content ≥80% by weight (Customs HS Code reference: 8101940001, 8101991001, 8101999001)
c. Silver-infiltrated tungsten with tungsten content ≥80% by weight (silver content ≥2%) (Customs HS Code reference: 7106919001, 7106929001)Capable of being machined into any of the following:
a. Cylinders with diameter ≥120 mm and length ≥50 mm
b. Tubes with inner diameter ≥65 mm, wall thickness ≥25 mm, and length ≥50 mm
c. Blocks with dimensions ≥120 mm×120 mm×50 mm(C) 1C004 Tungsten-nickel-iron alloys (Customs HS Code reference: 8101940001, 8101991001, 8101999001) or tungsten-nickel-copper alloys (Customs HS Code reference: 8101940001, 8101991001, 8101999001) with all of the following characteristics:
a. Density >17.5 g/cm3
b. Elastic limit >800 MPa
c. Ultimate tensile strength >1270 MPa
d. Elongation >8%(D) 1E004, 1E101.b. Technology and documentation for production of items in 1C004, 1C117.c, 1C117.d (including process specifications, parameters, and procedures)
II. Tellurium-Related Items
(A) 6C002.a. Metallic tellurium (Customs HS Code reference: 2804500001)
(B) 6C002.b. Single-crystal or polycrystalline products of any of the following tellurium compounds (including substrates or epitaxial wafers):
Cadmium telluride (Customs HS Code reference: 2842902000, 3818009021)
Cadmium zinc telluride (Customs HS Code reference: 2842909025, 3818009021)
Mercury cadmium telluride (Customs HS Code reference: 2852100010, 3818009021)
(C) 6E002 Technology and documentation for production of items in 6C002 (including process specifications, parameters, and procedures)
III. Bismuth-Related Items
(A) 6C001.a. Metallic bismuth and products not controlled under 1C229, including but not limited to ingots, blocks, beads, particles, powder, etc. (Customs HS Code reference: 8106101091, 8106101092, 8106101099, 8106109090, 8106901019, 8106901029, 8106901099, 8106909090)
(B) 6C001.b. Bismuth germanate (Customs HS Code reference: 2841900041)
(C) 6C001.c. Triphenylbismuth (Customs HS Code reference: 2931900032)
(D) 6C001.d. Tris(4-ethoxyphenyl)bismuth (Customs HS Code reference: 2931900032)
(E) 6E001 Technology and documentation for production of items in 6C001 (including process specifications, parameters, and procedures)
IV. Molybdenum-Related Items
(A) 1C117.b. Molybdenum powder: Molybdenum and alloy particles for missile components with molybdenum content ≥97% by weight and particle size ≤50×10-6m (50μm) (Customs HS Code reference: 8102100001)
(B) 1E101.b. Technology and documentation for production of items in 1C117.b (including process specifications, parameters, and procedures)
V. Indium-Related Items
(A) 3C004.a. Indium phosphide (Customs HS Code reference: 2853904051)
(B) 3C004.b. Trimethylindium (Customs HS Code reference: 2931900032)
(C) 3C004.c. Triethylindium (Customs HS Code reference: 2931900032)
(D) 3E004 Technology and documentation for production of items in 3C004 (including process specifications, parameters, and procedures)
Exporters must apply for permission from the commerce department of the State Council in accordance with the Export Control Law of the People's Republic of China and the Regulations on Export Control of Dual-Use Items when exporting the above items.
This announcement takes effect from the date of publication. The Export Control List of Dual-Use Items of the People's Republic of China will be updated accordingly.
To safeguard national sovereignty, security, and development interests, in accordance with the Foreign Trade Law of the People's Republic of China, the National Security Law of the People's Republic of China, the Anti-Foreign Sanctions Law of the People's Republic of China, and other relevant laws, and pursuant to the Provisions on the Unreliable Entity List, the Working Mechanism of the Unreliable Entity List has decided to add U.S. companies PVH Group and Illumina, Inc. to the Unreliable Entity List.
The above two entities have violated normal market transaction principles by discontinuing normal transactions with Chinese enterprises and implementing discriminatory measures against Chinese enterprises, seriously harming the legitimate rights and interests of Chinese enterprises. The Working Mechanism of the Unreliable Entity List will take corresponding measures against these entities in accordance with relevant laws and regulations.
Any matters not covered in this announcement shall be implemented in accordance with the Provisions on the Unreliable Entity List.
This announcement takes effect from the date of publication.
MOFCOM Spokesperson Answers Press Questions on China's WTO Case Against U.S. Tariff Measures
Q: It is reported that China has filed a case at the WTO regarding the U.S. imposition of 10% tariffs on Chinese products. Could you provide more details about this?
A: On February 1, the U.S. announced a 10% tariff on certain Chinese products. To defend its legitimate rights and interests, China has filed a complaint through the WTO dispute settlement mechanism regarding these U.S. tariff measures.
The U.S. imposition of additional tariffs on Chinese exports seriously violates WTO rules and is malicious in nature, representing typical unilateralism and trade protectionism. The U.S. actions seriously undermine the rules-based multilateral trading system, damage the foundation of China-U.S. economic and trade cooperation, and disrupt the stability of global industrial and supply chains. The U.S. has repeatedly placed unilateralism above multilateralism, drawing strong condemnation from WTO members. China firmly opposes these U.S. actions and urges the U.S. to immediately correct its wrong practices.
China is a firm supporter and important contributor to the multilateral trading system. We are willing to work with other WTO members to jointly address the challenges posed by unilateralism and trade protectionism to the multilateral trading system, and maintain orderly and stable development of international trade.
The list of American products to face Chinese tariffs is extremely mild. China’s government is avoiding punitive taxes against China’s people.
China’s tariffs raise prices on things Chinese are less likely to buy
15% levies on American coal and liquified natural gas.
10% levies on American crude oil, agricultural equipment and some large trucks.
All these items (except agricultural equipment) are products China wants to phase out in favor or electric cars, solar panels and batteries.
Regarding agricultural equipment, if you examine what China has been importing from the U.S., for each imported item, China no longer needs U.S. equipment. The U.S. was losing this market already, Trump just volunteered to take the blame.
Bottom line: China has responded with tariffs which have almost no effect on China’s people
GO CHINA GOO!!!!!!