China Retaliates Against U.S. Tariffs

What Happened?

Last week President Trump increased tariffs on goods from China by another ten percent.

That brings total tariffs on some imports from China to forty-five percent. 

In response, China imposed additional tariffs on a range of good from the United States. That includes agricultural items such as chicken, pork, and dairy products. China also targeted soybeans and grains, two of its top imports from the United States. 

While the U.S. tariffs on Chinese goods have already taken effect, the reciprocal tariffs from China on American goods will begin on March 10^th, 2025. 

In addition, fifteen American companies, including Leidos and General Dynamics, were placed on a list prohibiting them from importing goods that can be used for military purposes.

Why it Matters

China and the United States possess two of the world’s largest economies, with seventeen trillion and twenty-seven trillion in gross domestic products respectively. This new round of tariffs marks an escalation between the two countries, and one that is likely to be felt by consumers in both nations. 

In addition to increased costs for consumers, the normal flow of economic activity and trade between China and the United States could be disrupted.

Since corporations and producers will simply pass on the costs of these tariffs, consumers in the United States and China will most likely see an increase in the costs of a range of goods and services. A spokesman for China’s Ministry of Foreign Affairs said, “if the United States insists on starting a tariff war, a trade war or any kind of war China will fight to the last.”

China is the single biggest export market for American farmers, which is why many of the new tariffs will target food and other agricultural products. According to the U.S. Department of Agriculture, corn, soybeans and cotton will be among the items directly impacted by China’s new tariffs.

President Trump moved immediately to impose tariffs on China after taking office, on the grounds that China’s leaders are not doing enough to halt the flow of illicit drugs including fentanyl into the United States. 

According to the Drug Enforcement Agency, drug cartels in Mexico source precursor chemicals needed to make fentanyl from suppliers in China. Recent data indicates the flow of fentanyl into the U.S. remains high. 

The challenge for law enforcement officials is that most precursor chemicals are dual use, meaning they can be used for a number of legal purposes and to make fentanyl. That makes stopping those shipments much more difficult. 

Though the tariffs on China are relatively new, thus far the data suggests they have not produced the desired effect.

How it Affects You

Consumers will likely see an increase in the cost of goods imported from China, and U.S. exporters to China may soon face reduced sales.

Because their goods will now be more expensive in China due to tariffs, competitors will have an advantage in the marketplace.