(Bloomberg) -- China vowed to retaliate against the US but stopped short of imposing tariffs, after President Donald Trump announced a 10% levy on imports from the world’s No. 2 economy.
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China’s Commerce Ministry pledged to file a “lawsuit” against the US at the World Trade Organization, condemning the blanket tariff as a “serious violation” of international trade rules in a Sunday statement. Beijing will “take corresponding countermeasures to firmly safeguard its own rights and interests,” it added, without elaborating.
Trump unleashed the first salvo of his tariff war on Saturday, imposing levies of 25% on Canada and Mexico, as well as the lower rate on China, over what he says is a failure to prevent the flow of undocumented migrants and illegal drugs. That action just two weeks into his second term shows the US leader is serious about following through on promised trade curbs against both allies and adversaries.
“The practice of imposing tariffs is not constructive and will inevitably affect and undermine the future cooperation between the two sides on drug control,” China’s Foreign Ministry said in a separate statement.
While Canada immediately hit back by placing 25% counter-tariffs on C$155 billion ($107 billion) worth of American-made products and Mexico ordered retaliatory tariffs, Beijing’s reaction appeared more measured. Neither Chinese statement offered specifics on any counter measures, or explicitly threatened retaliatory tariffs.
“The focus of the US trade policy announced this weekend is on Canada and Mexico, not China, as reflected by the different tariff rates imposed on these countries,” said Zhiwei Zhang, president and chief Economist at Pinpoint Asset Management. “The trade negotiation between China and the US will be a long process.”
While the 10% levy imposed initially falls short of the much higher tariffs Trump threatened before taking office, it targets a nation already battling a grinding slowdown. Bloomberg Economics estimates an additional 10% levy could knock out 40% of Chinese goods exports to the US, jeopardizing 0.9% of China’s gross domestic product.
More tariffs likely lie ahead. Trump has ordered his administration to investigate China’s compliance with a deal struck during his first term, with recommendations from that review due by April 1.