China to Hit Back on US

[ABS News Service/30.04.2024]

China passed a law on Friday strengthening its trade defense capabilities as the United States and the European Union take aim at Beijing over excess industrial capacity.

The Tariff Law, approved by China's top legislature after three rounds of deliberations going back to 2022, signals to China's biggest trade partners its ability to hit back should they impose tariffs on exports of the world's No.2 economy, Reuters reported. It is the latest addition to Beijing's arsenal of trade defense instruments as it maintains an uneasy truce with Washington following a trade war that began while Donald Trump was U.S. president.

The law, which will take effect from Dec. 1, outlines a range of legal provisions related to tariffs on Chinese imports and exports, from what constitutes tax incentives to China's right to hit back at countries that renege on trade agreements. It was approved on the same day as U.S. Secretary of State Antony Blinken visited China for talks which produced little progress on contentious issues including U.S. complaints about cheap Chinese exports.

Rising tensions between Beijing, Washington and Brussels have validated Beijing's belief that it needs to consolidate and improve the measures it has at its disposal, analysts say.

Article 17 of the new law sets out how China can adopt the “principle of reciprocity” against markets it has signed a preferential trade deal with, and allows Chinese officials to apply equivalent tariffs on goods of countries that renege on their agreement.

Reuters also reported that China will extend tariff exemptions for imports of some U.S. products until Nov. 30, the finance ministry said in a statement on Monday. The additional exemptions that take effect on Wednesday follow current exemptions that expire on Tuesday, according to the ministry.