China Strikes Back at US

The US–China trade war appears to be restarting. When US President Donald Trump put a 10% sweeping levy on over $60 billion worth of Chinese goods, which takes effect February 04, 2025, he had one expectation: economic pressure would force China to give in. 

But that’s not what happened. China is not Colombia. Or Panama. Instead, China is responding with a strategy that’s been years in the making – targeting not just American products, but the foundation of America’s economic influence. 

Within days, China announced tariffs targeting $35 billion in American goods – focusing on farming, energy, and cars. A 15% tariff on coal and liquefied natural gas products as well as a 10% tariff on crude oil, agricultural machinery and large-engine cars imported from the US. 

But it’s not just about what they targeted; it’s about where. China focused on industries tied to important political regions in the US – e.g., soybeans from the Midwest, oil from Texas. This wasn’t just about hurting the economy. It was about creating pressure from inside the US, knowing that affected businesses would push back against these policies. 

That's not all. Beyond tariffs, China made new trade deals with countries like Brazil, Russia, and even Mexico – finding new suppliers to reduce their need for American goods. 

And while the US was focused on applying pressure through tariffs, China was quietly building a new strategy involving critical minerals, the backbone of modern technology. And China tightens export controls on them.

These include tungsten, tellurium, bismuth, molybdenum and indium, many of which are essential to US economic or national security that have supply chains vulnerable to disruption. They are needed to make things like smartphones, electric cars, and even military hardware. And China controls over 80% of the world’s supply. 

[The export controls are in addition to ones China placed in December on key elements such as gallium and germanium (and antimony and graphite, which were covered in subsequent export controls)]. 

A very smart move to put pressure on industries the US depends on for both business and security. Think about trying to build advanced technology without the raw materials needed to make it work. That’s the kind of quiet but powerful pressure China is using – not with loud threats, but with control over the resources the world relies on.  

All this time, China is securing critical supply chains, strengthening its hold on rare resources, and cutting deals with US rivals to weaken America’s leverage globally.

And Beijing filed a complaint with the World Trade Organization (WTO), vowing to "resolutely defend its rights".

Trump had campaigned on winning an economic competition against China and the tariffs on Chinese goods represent his opening salvo of what may become a bruising trade war. Still, I note that the 10% duties are a far cry from the upwards of 60% tariffs that Trump had threatened to levy on China during his presidential campaign, signaling that there could be more to come if he decides to escalate.

Trump is a bully. 

But as China is showing, it will not take it lying down. China is not only standing its ground but fighting back.

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