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How China could retaliate against Trump's tariffs

Jan 30, 2025 - businessinsider.com
President Donald Trump is threatening significant tariffs on Chinese imports, with a proposed blanket tariff of 60%. In response, China is prepared to implement countermeasures, including retaliatory tariffs on U.S. imports and leveraging its dominance in rare earth materials crucial for tech products. The U.S.-China rivalry is intensifying, particularly in the tech sector, with both countries aiming for supremacy in areas like AI and semiconductors. Analysts suggest this could lead to a new type of Cold War, with China potentially restricting exports of key minerals to the U.S.

China is also considering financial policy maneuvers, such as weakening its currency to support exports and imposing tariffs on U.S. agricultural products. The country is focusing on boosting domestic consumption and maintaining its status as a global manufacturing hub. While both Trump and Beijing seem to prefer avoiding a trade war, the evolving global economic landscape means China may have more leverage now than during the first trade war in 2018. This could result in more aggressive retaliation if tensions escalate, as China is less reliant on the U.S. than before.

Key takeaways:

  • President Donald Trump is threatening significant tariffs on Chinese imports, with a potential blanket tariff of 60%.
  • China is prepared to respond with retaliatory tariffs and other economic measures, including limiting exports of rare earths and key minerals.
  • China may use financial policy maneuvers, such as currency devaluation and fiscal stimulus, to counteract US tariffs and boost its economy.
  • Both the US and China are cautious about engaging in a trade war, but China has more leverage now due to decreased reliance on US exports.
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