China‘s retaliation to Trump's 20% tariffs

Chinese traditional culture emphasizes the integration of yin and yang. To employ the principle in Chinese martial arts, it means “the combination of hardness and softness” (launching a firm counterattack while controlling the force, or employing soft means simultaneously).

Likewise, in response to the Trump administration’s announcement of an additional 10% tariff on China—bringing the total to 20%—China today has brought out the countermeasures long prepared in its toolbox and adopted both soft and hard tactics.

The hard counterattack, as described by YuYuanTanTian, which is associated with CCTV, is referred to as "Nine Consecutive Strikes" (九连发). However, I wouldn't count a statement from the MOFCOM spokesperson as a "strike," even though this kind of wordplay reveals how much the Chinese government wants to be seen domestically as forcefully retaliating against the tariff war initiated by Trump.

In my view, the substantial countermeasures mainly consist of seven actions, most of which leave room for maneuver or are merely symbolic escalations on top of existing sanctions.

1. Imposing an additional 15% or 10% tariff on eight categories of U.S. agricultural products.

This is perhaps the toughest part of the entire retaliation. China is still one of the largest markets for U.S. agricultural exports, but imports from the U.S. have been declining at a double-digit rate annually. For example, soybeans are by far the #1 China-bound export for most farm states in the Midwest. Major soybean-producing states—Illinois, Iowa, Minnesota, Nebraska, Indiana, among others—are the primary sources of these exports. However, since China has shifted toward sourcing soybeans from Brazil over the past two years, the U.S. share of China’s soybean imports has already dropped to 18%. Corn used to be a major U.S. agricultural export to China, but China essentially curbed U.S. corn purchases by ~80%, making corn a much smaller portion of state export portfolios to China in 2024.

China’s economic slowdown and competition from other suppliers (Brazil, Australia) have led to weaker demand for U.S. beef, but China remains a major market for U.S. beef offcuts and steaks. Fruits and vegetables make up a smaller portion of U.S. exports to China. High Chinese tariffs during the trade war sharply curtailed U.S. fruit exports.

That said, the 10% and 15% tariff increases are relatively moderate. Moreover, existing bonded and tariff reduction policies remain unchanged, and a grace period has been provided (shipments that depart before March 10, 2025, and are imported between March 10 and April 12, 2025, are exempt from the new tariffs).

2. Adding 10 U.S. companies, including Tecumseh, to the Unreliable Entity List.

These 10 companies are all U.S. defense contractors with no business operations or revenue in mainland China. However, they have close ties with Taiwan and were already sanctioned last year for arms sales and intelligence cooperation with Taiwan. Measures taken include freezing their assets in China and prohibiting Chinese companies from doing business with them. Placing them on the Unreliable Entity List is essentially a reiteration of previous sanctions.

3. Applying Unreliable Entity List measures against Illumina.

As a countermeasure to Trump’s announcement of a 10% tariff hike on China, MOFCOM already added Illumina to the Unreliable Entity List on February 4. The new sanction is an escalation based on that designation. However, this time, MOFCOM did not ban all Chinese companies from doing business with Illumina as it had in the past but only prevented Illumina from exporting gene sequencers to China. The U.S. textile giant PVH, which was previously investigated alongside Illumina under the Unreliable Entity List, has not been subjected to any actual restrictive measures this time.

4. Adding 15 U.S. entities to the Export Control List.

These companies are mostly engaged in military, aerospace, and high-tech industries and are key players in the U.S. defense sector. Many are directly involved in arms sales or military cooperation with Taiwan (e.g., Leidos and GA-ASI provide aircraft/drone support to Taiwan, GDLS sells tanks to Taiwan, AeroVironment supplies drone munitions, Gibbs & Cox designs Taiwanese naval vessels, and Rapid Flight/Red Six/Shield AI assist with training or technical support for Taiwan). Others restrict China’s technological development (e.g., Skydio promotes U.S. alternatives to Chinese drones, IPVM exposes China’s surveillance abuses, and SourceMap helps block Xinjiang-related supply chains).

These companies either actively support countering China through military or sanction-related actions or openly express anti-China stances (such as Skydio and Shield AI's pro-Taiwan statements). Among them, satellite communications firm Aerkomm is being sanctioned by China for the first time due to its deep involvement in Taiwan's satellite communication infrastructure, while the rest have already been sanctioned and are restricted from any commercial dealings with China. While most of these sanctions are symbolic, given the complexity of supply chains, it's difficult to predict where a U.S. company's involvement might create bottlenecks—Skydio’s struggle after China cut off its battery supply is a prime example.

6. Launching an anti-circumvention investigation into U.S.-origin cut-off wavelength shifted single-mode optical fiber imports.

Notably, this is China’s first-ever anti-circumvention investigation as a trade remedy measure. Cut-off wavelength shifted single-mode optical fiber is a type of fiber that, through structural parameter adjustments (such as refractive index distribution, core, and cladding dimensions), shifts its original cut-off wavelength. By modifying these structural parameters, the fiber's transmission and application characteristics can be altered compared to its originally designed cut-off wavelength.

Since 2010, China has conducted anti-dumping investigations on imported non-dispersion shifted single-mode optical fiber of U.S. and EU origin, and has been imposing anti-dumping duties on such imports from the U.S. and EU since 2017. According to MOFCOM’s announcement, a leading Chinese cable company accused U.S. optical fiber manufacturers Corning Incorporated, OFS Fitel, and their exporters of circumventing the anti-dumping duties by changing the product name and tariff classification. Consequently, MOFCOM has initiated this anti-circumvention investigation. It is evident that the impact of this investigation is limited to a very small number of companies and a narrow industry segment.

7. Suspends U.S. Log Imports and Revokes Soybean Export Qualifications for Three U.S. Companies

8. On the Soft Side, and as a response to the Trump administration’s claim that China did not take action on the fentanyl issue, the Chinese State Council Information Office released a white paper titled "China’s Control of Fentanyl-like Substances." The full text of the white paper is available.