Retaliatory Tariffs Imposed in Response to U.S. '10%+10%' Tariff on China
China Targets U.S. Agricultural and Livestock Products
Concerns Rise Over Higher Food Prices in China Due to Tariff Impact
The Chinese government has initiated retaliatory tariffs in response to the U.S. Donald Trump administration's imposition of '10%+10%' tariffs on China. As both sides exchange retaliatory tariffs, a tariff war with no concessions continues between the U.S. and China. China's tariff measures targeting U.S. agricultural and livestock products are interpreted as an attempt to target President Trump's key voter base and put the Trump administration in a difficult position. However, there are also concerns that this retaliatory tariff on the U.S. could backfire on China by raising food prices at the Chinese dining table.
According to the Chinese State Council Tariff Commission on the 10th, the Chinese government raised tariffs by 15% on 29 U.S. products including chicken, wheat, corn, and cotton starting at midnight. Tariffs on 711 items including sorghum, soybeans, pork, beef, seafood, fruits, vegetables, and dairy products were increased by 10%.
According to the Japan External Trade Organization, the import volume of 740 items from the U.S. last year was $22.3 billion, accounting for 14% of total imports from the U.S. Including liquefied natural gas (LNG) and coal, which are subject to tariffs this time, the import value from the U.S. affected by tariffs is estimated to reach 22% of the total.
This is a countermeasure in response to the Trump administration's imposition of a 20% general tariff on the Chinese government on the 4th. Previously, when the U.S. imposed an additional 10% tariff on all Chinese imports starting from the 4th of last month, the Chinese government decided to impose an additional 15% tariff on U.S. coal and liquefied natural gas (LNG), and an additional 10% tariff on crude oil, agricultural machinery, large-displacement cars, and pickup trucks starting from the 10th of the same month. When the Trump administration imposed an additional 10% tariff again on the 4th of this month, the Chinese government launched a second round of retaliatory tariffs on this day.
This tariff imposition focuses on U.S. agricultural products. The major production areas of corn and soybeans, on which China imposed tariffs, were key voter bases supporting President Trump in last year's election. During Trump's first term, China also shook American agricultural sentiment by adjusting contracts, including canceling U.S. soybean purchase reservations, in response to tariff measures.
However, there are also views that China's second retaliatory measure could backfire on China itself. China depends on imports for about 80% of its soybeans. The residue from soybean oil extraction is used as pig feed, so if the supply of soybeans decreases due to rising import prices, it could lead to a reduction in pork supply or a sharp increase in pork prices, which are indispensable on the Chinese dining table. The Nihon Keizai Shimbun (Nikkei) reported, "Chinese authorities are sensitive to pork prices," and noted that "there are also claims that the Tiananmen Square incident in 1989, when the authorities violently suppressed the democratization movement, was caused by rising pork prices."
Although the Chinese government has announced additional retaliatory tariffs, it has also repeatedly sent conciliatory messages toward the U.S. On the 6th, Wang Wentao, China's Minister of Commerce, said, "Threats and intimidation do not work on China," but added, "The two countries can meet at an appropriate time, and the teams of both countries can communicate promptly."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
