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Can China keep raising tariffs on US as trade war continues? What Beijing said
While China relies on the US for high-end imports, the country has also invested in technology to reduce reliance on products from outside.
China raised tariffs on US goods on Friday from 84 per cent to 125 per cent, after the US increased the duties it had levied on Chinese products to a total of 145 per cent.
As the world's two largest economies tussle, global markets also bear the brunt of their trade war. However, how far can they up the ante on tariffs, and what are the next moves China could potentially take in the tariff war? Follow LIVE updates on the tariff war here
What has China done till now?
After US President Donald Trump was sworn into office for his second term, one of his first decisions was to tax Chinese products 25 per cent in rising increments claiming that Chinese involvement in fentanyl supply had harmed the US.
China denied these claims and retaliated against imports of American farm products like beef and pork as well as imposing export controls on strategically vital minerals.
Beijing also targeted big companies like DuPont China and Google with antitrust probes, while reaching out to other major American companies to solidify agreements that would be favourable to them.
Also Read: China hits back with 125% additional tariffs on US goods in tit-for-tat move
China has till now filed two complaints against the US at the World Trade Organisation. They have also issued a travel advisory for their citizens travelling to the US during such sensitive times.
Even movies have come under the radar, with the China Film Administration limiting foreign films to 34 each year, and pledging to “appropriately reduce,” the import of American films. China is Hollywood's second largest market, and the lack of audiences could be a big blow to the industry.
Also Read: UN body warns of ‘catastrophic’ impact of US-China trade war on developing countries
China has also urged countries to unite against Trump's “unilateralism and economic bullying,” and has tried to pursue trade opportunities with other partners.
This week, China's commerce minister, Wang Wentao, held talks with his counterparts at the European Union, the Association of Southeast Asian Nations, Saudi Arabia and South Africa.
President Xi Jinping also plans to travel to Vietnam, Cambodia, and Malaysia to improve regional as well as global peace and stability.
Can China raise tariffs further?
The Chinese commerce ministry stated on Friday, “If the US continues to play the tariff numbers game, China will ignore it. If the US insists on continuing to substantially infringe on China’s interests, China will resolutely counterattack and fight to the end.”
The ministry also indicated that they were open to talks, provided it was on equal footing.
“China is unlikely to change its strategy: stand firm, absorb pressure, and let Trump overplay his hand” writes Daniel Russel, vice president of international security and diplomacy at the New York-based Asia Society Policy Institute.
“Beijing believes Trump sees concessions as a weakness, so giving ground only invites more pressure,” he said, as quoted by Associated Press.
“After the first round of the trade war starting in 2018, the Chinese leadership has learned how to deal with Trump and his team. There has been a lot of preparation for this type of trade war to come up” said Chen Zhiwu, professor at the Hong Kong University Business School as quoted by AP.
A large share of Chinese exports to the US are relatively cheap, low-tech items like toys, furniture, appliances and apparel. While China imports high-end products such as semiconductors, aircraft parts, industrial machines etc from the US, they have been investing in the development of advanced technologies to reduce reliance on imported goods as well.
