The trade war between the United States and China intensified on Friday as Beijing threatened to impose retaliatory tariffs on U.S. goods ranging from liquefied natural gas to foods containing chocolate.
The Chinese move, which would affect $60 billion worth of U.S. imports, came just two days after President Trump ordered his administration to raise tariffs it has already proposed on $200 billion worth of Chinese goods to 25% from 10%.
“Because the U.S. side has repeatedly escalated the tension, disregarding the interests of enterprises and consumers of both sides, China has to take necessary countermeasures to defend the country’s dignity and the interests of the Chinese people, defend free trade and the multilateral system, and defend the common interests of all countries in the world,” China’s Commerce Ministry said.
White House National Economic Council Director Larry Kudlow warned China not to test Trump’s resolve. “They better not underestimate the president,” he told Fox Business Network. “He is going to stand tough.”
China’s latest threatened move in the trade war, if implemented, range from 5% to 25% and cover 5,207 tariff categories including semiconductors, some helicopters, small-to-mid-sized aircraft, condoms, iron ore, steel products, roasted coffee, sugar, and even car windscreens.
“LNG’s inclusion marks a deployment by Beijing of one of its last major weapons from its energy and commodities arsenal in its fight with Washington,” Reuters reported.
With Beijing planning to switch millions of households to LNG from coal, Morgan Stanley has estimated annual Chinese imports of U.S. LNG could rise to as much as $9 billion within two or three years, from $1 billion in 2017. The amount could be even larger if the United States resolves a logistics bottleneck.
“U.S. [gas] suppliers see China as a major future market,” said Lin Boqiang, professor on energy studies at China’s Xiamen University.
The U.S. was also the fourth-largest supplier of foreign chocolate products to China in 2017, worth around $24 million. “China’s growing sweet tooth is seen as a big sales opportunity for international makers of cookies and chocolate bars like Mars and Hershey,” Reuters said.