China and the US entered into a new stage in their ongoing import tax tit-for-tat on April 4 when Beijing announced that it would impose a stiff 25% tariff on over 100 US products in retaliation for US President Donald J. Trump‘s decision to single China out as the main target of his self-declared trade war.
The new regulatory tax will target soybean and sorghum products, cotton, several types of wheat, orange juice, chemicals, corn products, whiskey, cigars, tobacco, beef, lubricants, propane, plastics, cars, and certain types of aircraft.
China’s Commerce Ministry estimates the tariffs will affect €41 billion worth of imports from the US.
Soybeans are the biggest agricultural export to China. The highly lucrative commodity is mostly used as animal feed and biofuel, of which the US controls 37% of the global production; 62% of which is exported to China.
By singling out US soybean production, China has opted to strategically target agricultural regions controlled by Republicans as part of their response to Trump’s initial move to heavily tax Chinese products.
Airplanes tariffs are also expected to politically damage the Trump administration as Boeing exports one in four of its planes to China. Airbus is expected to move in to fill the vacuum and gain the market share formally occupied by the US’ aerospace industry.
China is the world’s largest air travel market the biggest market for aircraft. China’s Eastern Airlines is Boeing’s fifth biggest customer.
The tariff on cars is likely to deliver a significant blow to General Motors, which sells 10% of its production to China, while the Ford Motor Company will also be affected as cars shipped to China account for 4% of its total exports.
Washington initially listed 1,300 Chinese products to be hit by a 25% tariff. The isolationist and protectionist ideologues in the Trump administration claim the move was a coordinated response to the “unfair” intellectual property rights practices, most prominently, pressure on US companies to share technology.
The escalation of the trade dispute has shaken stock markets in the EU, UK, US, and China, while Beijing has opted to refer the US to the World Trade Organization for violating its rules.
The US has an 18% share of Chinese exports.