Trade

China Prepares Retaliatory Measures For Trump’s Next Tariffs

JM Ashby
Written by JM Ashby

China has already imposed retaliatory tariffs on most goods imported from the United States in response to Trump's tariffs on Chinese goods, leaving the Chinese with fewer options for responding to Trump's next wave of tariffs on an additional $300 billion in goods.

China could increase the size of their retaliatory tariffs by raising them beyond 25 percent, but they could also restrict critical exports to the United States.

Commentary that appeared in official Chinese state media indicates that China could restrict exports of rare earth minerals that are used in virtually every electronic device that you own.

From Reuters:

In a commentary headlined “United States, don’t underestimate China’s ability to strike back”, the official People’s Daily noted the United States’ “uncomfortable” dependence on rare earths from China.

“Undoubtedly, the U.S. side wants to use the products made by China’s exported rare earths to counter and suppress China’s development. The Chinese people will never accept this!” the ruling Communist Party newspaper added.

“We advise the U.S. side not to underestimate the Chinese side’s ability to safeguard its development rights and interests. Don’t say we didn’t warn you!” [...]

In its own editorial on Wednesday, sister paper the Global Times said an export ban on rare earths “is a powerful weapon if used in the China-U.S. trade war.”

“Nevertheless, China will mainly use it for defense,” it added, noting that while China might incur losses from a ban on exports, the United States would suffer more.

The idea that the United States would suffer more than China if they block exports of rare earth minerals is almost certainly true.

If you have a cell phone, computer, television or almost any other electronic device, it was likely constructed using rare earth minerals imported from China. China accounted for 80 percent of all imports of such minerals over the past three years.

Cell phone makers including Apple have already said Trump's next wave of tariffs could force them to raise prices. And if China restricts exports of rare earth minerals in response, it seems obvious that prices could increase even further.

On the flip side, there's little if anything the United States could restrict exports of that would harm the Chinese economy in equal measure.

  • muselet

    I’ve said it before: China can hurt the US economy far more than the US can hurt China’s economy.

    Leave it to a simpleminded bully like Donald Trump to pick on exactly the wrong country.

    –alopecia

    • Draxiar

      With it being a global economy everyone looses. I think trump believes that “his” prosperous economy will survive through this. When it doesn’t, and it won’t, he’ll blame someone else for it all.

      Recession is Coming.