China Strikes Back: Trade Tensions With The US Escalate

China has hinted at potential retaliatory actions against the recent trade barriers imposed by the United States, signaling a further escalation in the fraught relationship between the two economic superpowers.

On Sunday, China’s Ministry of Commerce announced the launch of an anti-dumping probe into polyoxymethylene (POM) copolymers. These thermoplastics, used in industries ranging from auto parts to electronics, are imported from the US, the European Union, Taiwan, and Japan. Thermoplastics are malleable when heated but solidify into a fixed shape when cooled, and can sometimes replace metals like copper and zinc.

The ministry stated that the investigation is expected to take a year but may be extended by an additional six months if necessary.

This announcement comes just days after President Joe Biden revealed that tariffs on $18 billion worth of Chinese imports, including electric vehicles (EVs) and other products, will significantly increase over the next two years. Specifically, tariffs on EVs imported from China will nearly quadruple from 27.5% to 100%. This move aims to counter Beijing’s strategy of promoting aggressively low pricing by domestic EV manufacturers, who currently benefit from a 40% tariff on US car imports.

The White House described these measures as essential to protecting American workers and businesses from China’s unfair trade practices, accusing China of "flooding global markets with artificially low-priced exports."

In response, China has vowed to take "all necessary actions to protect its legitimate rights."

Additionally, the EU is also scrutinizing state support for Chinese EV makers. Should the investigation reveal that their prices are artificially low, the EU plans to announce additional import duties by early July.

As both sides prepare for potential economic repercussions, the global market watches closely, aware that these trade tensions could have widespread impacts.