The Global Times, the Chinese state-backed media outlet, has reported that China is considering targeting American agricultural exports as a countermeasure against new US import tariffs.
This move raises the stakes in the ongoing trade war between the two largest economies.
US President Donald Trump accused China of not doing enough to stop the flow of fentanyl into America and threatened to impose an additional 10% tariff on Chinese goods starting Tuesday, bringing the total tariff to 20%.
China responded by saying the accusation was “blackmail.”
China’s countermeasures
“China is studying and formulating relevant countermeasures in response to the US threat of imposing an additional 10% tariff on Chinese products under the pretext of fentanyl,” Global Times reported on Monday, citing an anonymous source.
The report added:
The countermeasures will likely include both tariffs and a series of non-tariff measures, and US agricultural and food products will most likely be listed.
Neither China’s commerce ministry nor the US embassy in Beijing provided an immediate comment when contacted.
The US agricultural sector has always been susceptible to becoming a pawn during trade disputes with China, its largest market.
“Despite a decline in imports since 2018, any tariffs on key U.S. agricultural products like soybeans, meat and grains could have a significant impact on US-China trade as well as U.S. exporters and farmers,” Genevieve Donnellon-May, a researcher at the Oxford Global Society, told Reuters.
“The US agricultural sector has had time to prepare for a second Trump administration and trade war 2.0, with lessons learned from the first Trump administration,” she added.
“So, in theory, it should be in a better place to find alternative markets. However, the reality may prove far more complex.”
Commodities futures fall
Soymeal and rapeseed meal futures in China, already experiencing a supply shortage, saw a 2.5% surge in prices following the Global Times report.
This pushed the soymeal contract on the Dalian Commodities Exchange to its highest point since September 30, 2024.
China, the world’s second-largest economy and top agricultural importer, purchased $29.25 billion worth of US agricultural products in 2024.
This represented a 14% decrease from 2023 and continued a 20% decline observed in 2023.
The Global Times, owned by People’s Daily (the newspaper of the governing Communist Party), was the first to report on China’s planned response to the European Union’s tariffs on Chinese electric vehicles last year.
Beijing had less than a week to respond to Trump’s announcement with countermeasures or a deal.
The proposed additional levies also coincide with the start of China’s annual parliamentary meeting, a major political event where Beijing is expected to announce its 2025 economic priorities.
Trump tariffs may backfire
While Beijing still desires a truce with the Trump administration, the lack of trade talks suggests that a reconciliation between the two economic superpowers is increasingly unlikely, according to a Reuters report.
Wang Dong, executive director of the Institute for Global Cooperation and Understanding at Peking University was quoted in the report:
A China-U.S. trade war is not inevitable, but Trump’s decision to impose tariffs now is a bad decision.
“Trump and his advisors may think that imposing tariffs at this time is to put pressure on China, sending a signal, but this will backfire and China will inevitably respond strongly.”
The tit-for-tat tariffs between the two countries during Trump’s first term initiated a full-blown trade war that disrupted financial markets and negatively impacted global growth.
Beijing responded quickly to Trump’s initial round of fentanyl-related import duties on February 4th with a series of countermeasures.
These measures targeted US businesses, including Google and the owner of fashion brand Calvin Klein, and imposed new import duties on US coal, oil, and some autos.
Despite these actions, China’s commerce ministry expressed hope on Friday for a swift return to negotiations with the US, and cautioned that a failure to do so could lead to further retaliation.
The post China eyes US agriculture for potential trade war escalation: report appeared first on Invezz
