China is not likely to retaliate against President Trump‘s threatened new tariffs by applying new tariffs of its own, because it has already put tariffs on almost all the American goods it imports. Instead, it is likely to raise tariff rates and limit access to markets in other ways.
Beijing has to date placed tariffs of 5% to 25% on about $110 billion worth of U.S. goods, which is close to the total amount of it imports annually. It has only an estimated $10 billion worth of U.S. imports left that it could place new tariffs on, according to Census Bureau data. Crude oil and aircraft are two of the largest remaining industries.
That doesn’t mean that China cannot respond in other ways, argued Bryan Riley, trade policy analyst with the National Taxpayers Union. “The idea that we have more leverage than China simply because we import more from them is short-sighted, because China has more ways to retaliate than just by imposing tariffs,” he said.
A top official at one D.C.-based trade association agreed that Beijing had a lot of options beyond tariffs. “It could also stop granting licenses and permits to any American company seeking to do business there,” the official said. “It could block or ban U.S. activity in a variety of sectors. We’ve things like an increase in port inspections too.”
Quantifying the potential impact of such measures is hard to gauge, the official noted, precisely because it would be so random. It would likely be felt across U.S. industries, including agriculture, goods and services.
The flip-side, though, is that China does need trade with the U.S., so it will still want to avoid such a retaliation if it can. “Just as Trump’s tariffs harm both China and the United States, any Chinese retaliation would hurt both countries as well,” Riley said.
[Related: Trump says China deal is possible but that tariffs are an ‘excellent’ alternative]
The U.S. has imposed tariffs of 10-25% on $250 billion worth of Chinese goods. As of midnight Thursday those rates are set to hit 25% across the board and and will cover an additional $325 billion worth of goods if the Trump administration and Beijing cannot reach an accommodation.
Commerce Ministry spokesman Gao Feng told reporters in Beijing Thursday that China would respond if the U.S. follows through with its threat: “China’s attitude has been consistent and China will not succumb to any pressure. China has made preparations to respond to all kinds of possible outcomes.” He did not say how it would respond.
The Global Times, a publication of China’s Communist Party, said Thursday that Beijing was “well-prepared” to escalate the trade fight, but was similarly vague on what Beijing would do. “A variety of plans are in place, such as countermeasures for any tariff rise, and favorable policies to minimize losses for Chinese enterprises,” it said in an editorial.
Trump has often argued that tariffs on Chinese goods are good policy on their own because they bring in more than they cost. “Our alternative [to a deal with Beijing] is an excellent one. It is an alternative I have spoken about for years. We’ll take in well over $100 billion a year. We never took in 10 cents from China [before],” Trump told reporters Thursday.
