China retaliates against US tariff hikes but leaves room for dialogue

Calibrated measures signal Beijing's resolve, but will not deal too heavy a blow: Analysts

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SHENZHEN/BEIJING - Minutes after US President Donald Trump's sweeping tariff hikes on Chinese goods kicked in on Feb 4, Beijing fired off a series of retaliatory salvos of its own: a carefully crafted basket of measures that signals China's resolve yet leaves space for dialogue.

Unlike the US, whose tax hikes of 10 per cent span all Chinese goods, Beijing's moves target specific American exports and companies that do business in China. They also tighten access to Chinese exports of critical minerals.

"The response is well-calibrated," said Mr Stephen Olson, a former US trade negotiator.

"Strong enough to get Trump's attention without being so damaging that it torpedoes the ability of the two countries to strike some type of deal," the visiting senior fellow with the ISEAS - Yusof Ishak Institute told The Straits Times.

China announced tariffs of 15 per cent on American coal and liquefied natural gas (LNG), and 10 per cent tax hikes on crude oil, farm machinery, pickup trucks and other goods. These are to take effect on Feb 10.

Beijing's countermeasures will not deal too heavy a blow to the US for now, analysts noted.

"Chinese imports of American fossil fuels, gas-guzzling cars and farm equipment are insignificant," Ms Erica Tay, Maybank's director of macro research, told ST.

Still, China's targeting of the energy sector would not go unnoticed by the US President, others added.

Mr Olson said: "Trump envisions the US as an energy powerhouse, and these are all important export sectors."

China reserved its highest tariffs for LNG - of which the US is the world's largest exporter - as well as coal.