China Issues Tariffs on U.S. Goods, Restricts Critical Minerals

China announced new tariffs yesterday on goods from the U.S., shortly after American tariffs on products from China took effect (CNBC).

What’s going on: “China’s Finance Ministry said Tuesday it will impose additional tariffs of 15% on coal and liquefied natural gas imports from the U.S. and 10% higher duties on American crude oil, agricultural machinery and certain cars, starting Feb. 10.”

On Saturday, President Trump signed executive orders imposing new tariffs on goods coming to the U.S. from Canada, Mexico and China. On Monday, the administration issued a month-long pause after Canada and Mexico “agreed to take steps to prevent the illicit drug trafficking of fentanyl into the U.S.” The tariffs on Chinese goods went forward on Feb. 4.
In addition to the new tariffs, China retaliated Feb. 4 with restrictions on the export of five critical minerals: tungsten, tellurium, bismuth, molybdenum and indium. These materials are essential to U.S. national security and advanced technologies.
In addition, China said it would open an investigation into Alphabet, Google’s parent company, over alleged antitrust violations.

What it means: “These moves are warnings that China intends to harm U.S. interests if need be but still give China the option to back down,” Julian Evans-Pritchard, head of China economics at Capital Economics, wrote to CNBC.

China could still pause or cancel the tariffs on U.S. goods before next Monday, Evans-Pritchard said.
If they go into effect, “[t]he additional duties would reduce China’s real gross domestic product growth by 50 basis points this year, economists at Goldman Sachs said in a report Monday, reinforcing calls for stronger domestic stimulus measures to offset impacts from the rising tariffs,” according to CNBC.