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Did China teach a lesson to US by retaliatory tariffs?

Did China teach a lesson to US by retaliatory tariffs?

Introduction

China’s retaliatory tariffs on U.S. goods represent a calibrated response rather than a decisive “lesson,” targeting strategic sectors while leaving room for negotiation. The measures impose 15% tariffs on U.S. coal and liquefied natural gas (LNG) and 10% levies on crude oil, agricultural machinery, and large-engine vehicles starting February 10, 2025. These actions follow President Trump’s 10% across-the-board tariff on Chinese imports, which took effect February 4.

Strategic Impact on U.S. Interests

Economic Consequences

Energy sector strain: While U.S. LNG exports to China had been growing (5.4% of China’s imports in 2024), the tariffs primarily target symbolic rather than critical dependencies. China sources just 1.7% of its crude oil and 3% of coal from the U.S..

Corporate fallout: U.S. companies Illumina (biotech) and PVH Corp (Calvin Klein/Tommy Hilfiger) were added to China’s “unreliable entity list,” restricting their operations in China.

Consumer costs: Historical data shows U.S. consumers bore 90% of tariff costs during the 2018–2020 trade war, with average households paying $625–$1,270 annually in hidden taxes.

Geopolitical Dynamics

WTO legitimacy challenge: China framed its response as defending multilateral trade rules, filing a WTO complaint against U.S. “unilateralism”.

Escalation risks

The delayed February 10 implementation allows a diplomatic window, but failure to negotiate could trigger additional U.S. tariffs. Analysts warn of a 30% chance of full-blown trade war reignition.

America’s Biggest Loss: Economic Reality Over Ego

Money

The U.S. economy faces tangible risks:

Supply chain disruptions

25% of German-made cars sold in America rely on Mexican production networks now facing tariff uncertainty.

Sectoral vulnerabilities

Midwestern refineries importing 70% of crude from Canada/Mexico could see gas prices spike $0.50/gallon.

Corporate losses

Google faces an antitrust probe in China, while rare-earth export controls threaten U.S. tech manufacturing.

Ego

While China’s defiance challenges U.S. trade policy dominance, the measured retaliation avoids direct humiliation.

As Julien Chaisse, a Hong Kong trade law expert, notes: “Beijing’s moves demonstrate resolve without foreclosing dialogue”.

Conclusion

The immediate financial toll ($20 billion in targeted U.S. exports) pales against broader systemic risks. However, repeated tariff cycles since 2018 have already cost the U.S. 0.4–1.3% of GDP growth potential.

While national pride influences rhetoric, the concrete losses center on economic efficiency – higher consumer prices, corporate uncertainty, and strained alliances – rather than symbolic ego battles.

As the Tax Foundation warns, tariffs function as regressive taxes that “shrink the economic pie for everyone”.

How are other countries responding to the U.S. tariffs

How are other countries responding to the U.S. tariffs

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