The United States has the upper hand in its escalating tariff battle with China: China’s exports to America are almost four times the U.S. shipments to China.
But China has other weapons against its nemesis besides further tariffs.
Nearly half of U.S. companies doing business in China said they've experienced non-tariff retaliation from China since the U.S. first imposed duties last July, according to a survey this month by the American Chamber of Commerce in China. The group represents more than 900 American companies operating in China.
“Increased regulatory enforcement, greater inspection of U.S. shipments, preferential treatment with respect to procurement, etc., can cause significant losses to U.S. businesses,” says Thomas Prusa, an economics professor at Rutgers University. “Most observers underestimate the leverage China has with these other tools of trade policy.”
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The question of how else China can strike back at the U.S. is increasingly debated as the U.S. begins preparing tariffs on the remaining $300 billion or so in Chinese imports, a move that would add to existing U.S. duties on $250 billion in imports from China.
The U.S., by contrast, exports just $120 billion in goods to China.
Here are five possible steps China could take to hurt the U.S. economy beyond more tariffs.
Stop buying American products
China could renege on its promises to buy an additional 10 million tons of U.S. agricultural products. That would prolong the pain for American farmers beset by lower sales to China and falling prices.
“Trump’s trade war is turning the world’s most productive farming sector into a giant welfare state as U.S. farmers will apparently receive (for a second consecutive year) massive government subsidies in order to stay in business,” Prusa says.
China is also threatening to stop funding a $43 billion natural gas project in Alaska, according to the South China Morning Post, a daily newspaper based in Hong Kong.
Slow down customs clearances
“The customs process has become increasingly more stringent and tougher for many foreign companies over time,” says John Larkin, president of Larkin Trade International, a consulting firm specializing in trade compliance in China.
Nearly 20% of American companies have experienced slower customs checks in China, the latest survey of American Chamber of Commerce in China shows.