China's Retaliatory Measures in Response to Trump Tariffs
Highlights
- Tariffs of 10 percent on all Chinese imports took effect on Feb. 4, 2025, following President Donald Trump's executive order under the International Emergency Economic Powers Act (IEEPA).
- China responded with 10 percent and 15 percent retaliatory tariffs on select U.S. natural resources and machinery, set to take effect on Feb. 10, 2025.
- Additionally, China tightened trade measures by expanding export controls on critical minerals, adding two U.S. companies to its Unreliable Entity List and launching an antitrust investigation into Google.
President Donald Trump on Feb. 1, 2025, issued the Executive Order "Imposing Duties to Address the Synthetic Opioid Supply Chain in the People's Republic of China," which introduced additional 10 percent duties on all imports from China, with the tariffs applying to goods entered for consumption or withdrawn from warehouses starting at 12:01 a.m. ET on Feb. 4, 2025. (See Holland & Knight's previous alert, "An Overview of IEEPA Duties on Canada, Mexico and China," Feb. 4, 2025.).
In response to the U.S. tariffs, China's Ministry of Finance announced counter tariffs on Feb. 4, 2025. These include additional duties of 10 percent and 15 percent on select U.S. goods, set to take effect on Feb. 10, 2025. Meanwhile, the Ministry of Commerce implemented export controls on critical minerals and placed two U.S. companies on its Unreliable Entity List. Additionally, China's State Administration for Market Regulation launched an antitrust investigation into Google. Furthermore, China has filed a case against the U.S. tariff measures under the World Trade Organization dispute settlement mechanism.
Although these actions demonstrate China's response, they appear measured rather than extreme, suggesting that China might be open to negotiations.
China's Counter Tariffs
To retaliate against the 10 percent U.S. tariff on all Chinese goods, China introduced the following additional duties on U.S. exports:
- 15 percent tariffs on coal and liquefied natural gas (LNG), covering goods under eight Harmonized Tariff Schedule (HTS) codes
- 10 percent tariffs on crude oil, agricultural machinery and large-engine vehicles, affecting commodities under 72 HTS codes
These tariffs are scheduled to take effect on Feb. 10, 2025.
Expanded Export Controls on Critical Minerals
China has also broadened its export restrictions on minerals essential for high-tech industries (English option available), including items and technologies related to tungsten, tellurium, bismuth, molybdenum and indium. These restrictions add to previous export limits on gallium, which were introduced in December 2024.
Exporters of these materials must obtain a license from the Chinese Ministry of Commerce, with the new controls effective immediately.
U.S. Companies Added to China's Unreliable Entity List
China placed Illumina and another U.S. company on its Unreliable Entity List (English option available), citing their discriminatory actions against Chinese businesses and alleged violations of legitimate rights and interests. Being listed could result in restrictions on trade activities and future investments in China.
China Targets Google with Antitrust Probe
China targeted Google (English option available) for alleged violations of the country's anti-monopoly law and initiated an investigation in accordance with the law. It did not provide further details on the investigation or on what basis it is alleging that Google has breached the law.
Google has a more limited presence in China than in many other markets. For instance, its search engine does not operate in China.
China's recent actions indicate a strategic selection of trade measures in response to the additional 10 percent tariffs the U.S. government imposed on products of China, positioning itself better for potential negotiations. Companies should immediately assess the potential impact of these tariffs, retaliatory duties and regulatory actions on their business operations and supply chains.
Furthermore, President Trump issued a presidential memorandum titled "America First Trade Policy" on Jan. 20, 2025, outlining the immediate trade priorities for his administration. The memorandum directs the U.S. Department of Commerce and Office of the United States Trade Representative (USTR) to evaluate the economic and trade relations with China and issue reports to the president no later than April 1, 2025. (See Holland & Knight's previous alert, "An Overview of President Trump's Trade Policy to Date," Jan. 31, 2025.) Companies should remain vigilant for potential new developments in U.S. trade policies toward China.
Holland & Knight's International Trade Group is closely monitoring the U.S.-China trade relationship and is available to provide guidance on technical tariff matters and policy-related engagement, helping businesses communicate key concerns to U.S. legislators and policymakers.
For further inquiries, please contact the authors or another member of Holland & Knight's International Trade Group.
Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.