China Hits US Agriculture, Says Will Not be Bullied by Fresh Trump Tariffs

BEIJING (Reuters) - On Tuesday 4 March 2025, China swiftly retaliated against fresh US tariffs, announcing 10%-15% hikes to import levies covering a range of American agricultural and food products, moving the world's top two economies a step closer towards an all-out trade war.

Beijing also placed 25 US firms under export and investment restrictions on national security grounds, but refrained from punishing any household names, as it did when it retaliated against the Trump administration's 4 February tariffs.

In a press conference, China's foreign ministry said the country has never succumbed to bullying or coercion, and that "trying to exert extreme pressure on China is a miscalculation and a mistake."

China's latest retaliatory measures came as the extra 10% duty US President Donald Trump threatened the world's second-largest economy with last week entered into force at 06:01 CET on 4 March, resulting in a cumulative 20% tariff in response to what the White House considers Chinese inaction over drug flows.

China has accused the White House of "blackmail" over its tariff hike, saying it had some of the world's toughest anti-drug policies.

Analysts say Beijing still hopes to negotiate a truce with the Trump administration, deliberately setting its tariff hikes below 20% to leave Chinese negotiators room to hash out a deal, but each escalation reduces the chance of a rapprochement.

"China's government is signalling that they do not want to escalate," said Even Pay, agriculture analyst at Trivium China.

"It's fair to say we're in the early days of Trade War 2.0," Pay added, noting that there is still time to avoid a protracted trade war if Trump and Chinese President Xi Jinping are able to strike a deal.

The new US tariffs represent an additional hike to preexisting levies on thousands of Chinese goods.

Some of these products bore the brunt of sharply higher US tariffs under former president Joe Biden last year, including a doubling of duties on Chinese semiconductors to 50% and a quadrupling of tariffs on Chinese electric vehicles to over 100%.

The 20% tariff will apply to several major US consumer electronics imports from China that were previously untouched, including smartphones, laptops, videogame consoles, smartwatches and speakers and Bluetooth devices.

China responded immediately after the deadline, announcing it will impose an additional 15% tariff on US chicken, wheat, corn and cotton and an extra 10% levy on US soybeans, sorghum, pork, beef, aquatic products, fruits and vegetables and dairy imports from 10 March.

Beijing also added fifteen US companies to its Export Control List, which prohibits Chinese firms supplying American companies with dual-use technologies, and ten American companies to its Unreliable Entity for selling arms to Taiwan, which China claims as its own territory.

"We're still on track to 60% [tariffs]," said Cameron Johnson, supply chain expert at Tidalwave Solutions, referring to Trump's campaign trail threat.

"At the moment, with 20%, it just barely moves the needle for companies wanting to move potential supply chains out of the country," he added. "At 35%, we start to see that companies will start to move or consider other strategies."

China is the biggest market for US agricultural products, and the sector has long been vulnerable to being used as a punching bag in times of trade tensions.

Chinese imports of US agriculture goods fell for a second year to $29.25 billion in 2024 compared to 42.8 billion in 2022.

China's futures markets were steady after the announcement. The world's biggest agricultural importer's most actively traded soymeal and rapeseed meal futures saw a 2.5% increase on Monday after the Global Times reported Beijing planned to hit US agricultural exports.

Supply-chain shifts

Trade tensions risk exacerbating US inflation and China's continuing efforts to mount a durable post-COVID economic recovery, which has been heavily reliant on exports.

The US-China Business Council (USCBC) on Tuesday applauded Trump's goal of addressing the illegal trade of fentanyl, but said raising tariffs on Chinese products "is not the way to achieve that goal".

"Across-the-board tariffs will hurt US businesses, consumers and farmers and undermine our global competitiveness," USCBC President Sean Stein said in a statement.

All the same, the China-US trade war could benefit third countries.

Since the US and China imposed tit-for-tat tariffs during Trump's first term, Beijing has taken steps to reduce its reliance on American farm goods by promoting production at home and buying more from countries like Brazil.

US agricultural exporters could also step up efforts to replace the China market by shipping more to Southeast Asia, Africa and India.

"Chinese tariffs on US wheat and corn imports should be supportive for demand for Australian wheat and barely exports," said Dennis Voznesenki, analyst at Commonwealth Bank in Sydney. "However, China's recent slowdown in imports of feed grains from all origins should temper the excitement."