How China’s Retaliatory Tariffs And New Policies Could Threaten US Companies And Households

Vijay Valecha, Middle East Forbes, April 17, 2025

This is the first installment of a two-part series exploring the escalating trade tensions between the US and China—and their growing impact on American businesses and households.

As the US-China trade war intensifies, Beijing is doing more than retaliating—it’s recalibrating its global strategy. Alongside imposing counter-tariffs, China is actively deepening economic ties with the European Union and regional Asian partners in a bid to soften the blow of rising tensions and unlock new opportunities in global trade.

‘Fight to the end’

A new round of tariff hikes—branded the “Liberation Day” measures—went into effect on April 9, marking the latest escalation in US President Donald Trump’s ongoing trade war. While Trump announced a 90-day suspension of some tariffs for most countries, he simultaneously raised tariffs on Chinese goods to 125%. He justified the sharp increase by citing a “lack of respect” from Beijing, which had just declared its retaliatory tariffs of 84% on US imports. China’s measures came into force the following day.

China has declined to pursue negotiations, declaring it would “fight to the end” in the escalating tariff war. In response, Trump raised tariffs on Chinese imports to a steep 145%. China has condemned the policy as “economic bullying.”

China’s Ministry of Commerce defended its reciprocal tariffs as necessary to protect China’s sovereignty, security, and development interests, as well as to uphold balance in global trade.

How will China’s retaliatory tariffs and new policies impact US businesses and households? Here’s what we know.

Which products are affected—and by how much?

Trump’s first round of tariffs on China, which took effect on February 4, imposed a 10% duty on goods from the country. In response, Beijing enacted a 15% tariff on coal and LNG, and a 10% levy on US crude oil, agricultural machinery, and large-engine vehicles.

As the world’s largest LNG importer, China ranked the US as its fourth-largest supplier in 2024, behind Australia, Qatar, and Russia.

The US relies heavily on China for products like mobile phones, electronics, clothing, and toys, according to US Census Bureau data. Analysts predict that if current tariff rates persist, shoppers will face significant price hikes across many everyday items.

In fact, Trump’s tariffs on Chinese imports have driven up prices for products like laptops, toys, and fast fashion. According to PIIE Economics data, China is a dominant supplier of toys, sports equipment, and nearly 40% of US footwear, as well as about a quarter of US electronics.

“Let’s take the furniture industry for example. In 2023, between 30%-40% of the furniture will be produced in the US, but for this production, about 50% of the raw materials required – hinges, screws, and fabrics will be imported,” Vijay Valecha, chief investment officer of UAE’s Century Financial, told Forbes Middle East.

Seeking allies

As the US imposes more tariffs, China is seeking global support to pressure Washington into easing its stance. On April 11, President Xi Jinping told Spanish Prime Minister Pedro Sánchez: “There is no winner in a tariff war."

Sánchez met Xi to finalize a trade agreement allowing Spain to export more meat byproducts and cherries to China. Spain is a key supplier of certain meats, accounting for 20% of China’s imports. The two nations also made progress in EV tariff negotiations. Spain, which generated 56% of its electricity from renewable sources last year, relies on China for critical raw materials and advanced green technologies.

Meanwhile, European Commission President Ursula von der Leyen spoke with Chinese Premier Li Qiang, calling for stability and a fair trading system amid US tariffs. Xi also embarked on a diplomatic tour in Southeast Asia, visiting Vietnam, Malaysia, and Cambodia to strengthen regional ties and address trade tensions.

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