China announced on Tuesday, February 4 that it filed a formal complaint with the World Trade Organization’s (WTO) dispute settlement mechanism against the decision by US President Donald Trump to impose 10% additional tariffs on Chinese goods.
The move is an attempt to safeguard China’s “legitimate rights and interests” against the US “egregious act” of imposing additional tariffs on Chinese products which seriously violates WTO rules, Chinese Ministry of Commerce said in a press conference calling the US act “typical of unilateralism and trade protectionism.”
A day earlier, a spokesperson of the Chinese Ministry of Foreign Affairs had warned the US not to indulge in “trade war” as such wars have no winners. China also rejected Trump’s claims that it was responsible for the alleged drug related issues in the US claiming it is the “toughest country” on counternarcotics.
“The US needs to view and solve its own fentanyl issue in an objective and rational way instead of threatening other countries with arbitrary tariff hikes,” the spokesperson of the Chinese Ministry of Foreign Affairs said.
In a presidential order issued on February 1, Trump accused Canada, Mexico, and China, three of its largest trading partners, of not doing enough to stop the flow of the fentanyl and “illegal immigrants” into the US through their borders and announced that he would impose a 25% tariff on imports from its immediate neighbors and a 10% additional tariff on Chinese goods. The measures were to go into effect on February 4 in case these countries fail to take effective measures to prevent the flow of drugs and immigrants.
Canada and Mexico signed last minute deals with the US on Monday which postponed the implementation of the additional tariffs for one more month. However, the additional tariffs on Chinese goods came into effect on Tuesday.
There are no winners in a trade war
Though Trump has used the drug trade and immigration to justify his additional tariffs on goods imported from Canada, Mexico and China, it is widely perceived as a continuation of his “trade war” as a policy to reduce reliance on imports and to revive domestic production as promised during his re-election campaign last year.
The Joe Biden administration had limited the trade war initiated by Trump in 2019 by focusing mainly on imposing restrictions on Chinese high tech sectors.
Responding to the US moves on Tuesday, China announced the imposition of a 15% additional tariff on coal and liquified natural gas (LNG) imported from the US. The move would be effective from February 10. It also announced an additional 10% tariff on crude oil, agricultural machinery, large displacement automobiles, and pick up trucks imported from the US, Xinhua reported.
China also announced restrictions on metals exported to the US to be used in its defense industry such as tungsten, tellurium, bismuth, indium, and molybdenum. According to the reports in Reuters, the US has either stopped mining some of these metals such as tungsten or could no longer produce them which makes it highly dependent on imports for their supplies.
The Chinese Ministry of Commerce said the steps to raise the tariffs on imported goods and export restrictions are taken to “safeguard national security interests.”
On Tuesday, China’s Ministry of Commerce also announced adding two US firms, PVH Corp, a company which owns global fashion brands such as Calvin Klein and Tommy Hilfiger and Illumina, a biotechnology firm, into the country’s unreliable entity list. It accused the entities of violating “normal trading principles,” terminating “regular trade with the Chinese companies” and adopting “discriminatory measures against Chinese companies, thus severely harming their legitimate rights and interests,” Xinhua reported.
It also announced an investigation into Google on Tuesday accusing it of violating the country’s anti-monopoly laws.
