China’s response to the Trump Administration’s latest tariffs imposed on Friday was an exercise in strategic restraint. The levies, which range from 10% to 12.5%, have been met with cautious relief in many other trading partners in Asia.
China’s state media condemned the new US forced labor Section 301 tariffs as “economic bullying” and voiced its familiar refrain that Beijing “opposes all forms of unilateral tariff measures.” However, there has been no suggestion yet of counter-tariffs.
Chinese President Xi Jinping has a diplomatic summit with his US counterpart in late September and wants to maintain both access to the US market and hopes to stabilize bilateral ties as much as possible, analysts said.
The Trump Administration applied a 12.5% tariff on China because of alleged lax enforcement in preventing forced labor in its supply chains, mainly in regard to Uyghur minorities in western Xinjiang province. Beijing says these claims are baseless.
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The imposition of a 12.5% tariff from a temporary 10% global tariff by a new ‘board of trade’ is also seen as a relatively modest increase, and nothing like the sort of figures imposed early last year.
China has also shifted large parts of its supply chain to other countries, while the US tariff has been imposed on 60 countries, including allies, who also aren’t happy with the latest duties.
Japan and Korea have expressed deep regret at the move, while Tokyo wants reassurance that the levies do not violate bilateral trade pacts.
Singapore and Australia have both pushed back, after they were also hit with 12.5% tariffs. Canberra says the move is “unjustified” and inconsistent with free-trade agreements it has with Washington, while Singapore said there is no factual justification for a forced-labor penalty.
The Thai government has said the near-term impacts will be limited, given it’s a relatively small increase from 10%, and it is reportedly relieved that Vietnam has also faced a 12.5% tariff.
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The electronics and electrical equipment sector in Southeast Asia could be one of the biggest sectors impacted by the move, as about a third of Thai and Malaysian electrical equipment exports go to the US.
But more than 2,000 export items from ASEAN are exempt from the new levy.
Advanced computing chips from hubs like Taiwan operate under Section 232 arrangements, with a 15% tariff, rather than facing forced labor duties, experts said.
The Trump administration has moved swiftly to rebuild the president’s tariff wall after the Supreme Court struck down a host of his duties in February – dealing a blow to his ability to unleash steep levies at will.
After the setback, Trump tapped different authorities to reimpose a 10% tariff on imports. But this only lasted 150 days and expired on Friday. The volley of new duties, initially proposed in June, now takes its place.
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US Trade Representative Jamieson Greer said, “The United States has had a forced labour import ban for nearly a century, and rigorously enforces it; it’s well past time for our trading partners to do the same.”
Under Thursday’s announcement, economies that have implemented a forced labour import prohibition or committed to do so were hit with the lower 10% rate. They include Canada, the EU, India, and the United Kingdom.
