Trade War 2.0: U.S. and China Lock Horns Over Tariffs

China has retaliated against new U.S. tariffs with increased levies on American agricultural products and restrictions on U.S. firms. Analysts note the potential negative impacts on both countries, with a focus on agricultural markets. The move is strategic to avoid significant escalation in trade tensions.

In response to the latest U.S. tariffs, China announced on Tuesday that it would impose 10%-15% hikes on import duties for a variety of American agricultural and food products. The countermeasures also include placing twenty-five U.S. firms under export and investment restrictions.

Industry experts warn that the tariff disputes could harm both economies. Wang Zhuo, a partner at Shanghai's Zhuozhu Invest, remarked that while higher tariffs may help politically, they could negatively affect China, which relies on affordable U.S. agricultural goods. Similarly, Dennis Voznesenski from Commonwealth Bank in Sydney highlighted that the new tariffs might bolster demand for Australian exports, but a general slowdown in feed grain imports could dampen enthusiasm.

The restraints in China's countermeasure response, such as limited impacts on U.S. soybean imports, suggest a strategic decision to avoid severe trade tensions, noted Even Pay from Trivium China. However, increased tariffs on U.S. aquatic products, like tilapia, could significantly disrupt trade flows, with tariffs reaching prohibitive levels of up to 45%.

(With inputs from agencies.)