China has imposed additional tariffs on $21 billion worth of US agricultural and food goods in response to a 10% tariff hike announced by President Donald Trump. Beijing has also restricted exports and investments of 25 US companies on national security grounds but has not targeted well-known brands.
Analysts believe China is still leaving room for negotiations by setting retaliatory tariffs below 20%, but each increase reduces the chances of reaching an agreement. In addition, China has also investigated US fiber optic companies, suspended the import licenses of several US exporters, and halted shipments of logs.
The new US tariffs also affect a range of electronic products from China, including smartphones and laptops. In response, China has raised tariffs on US soybeans, meat, fruit, and dairy products. The move is expected to affect 15% of US exports to China.
The trade conflict could accelerate changes in global supply chains, with companies looking for alternatives. In addition, countries such as Brazil and Australia could benefit from reduced Chinese imports of US agricultural products.
The US-China Business Council has warned that sweeping tariffs could hurt US businesses and consumers. Meanwhile, analysts expect the trade war could increase inflation in the US and hurt China's export-reliant post-COVID economic recovery.as
