1 week Ago By Moneycontrol
With China hitting back at the latest US tariffs, the global economy now teeters on the brink of a full-blown trade war. Vivek Khatri, a chartered accountant and well-known finfluencer, believes the latest developments signal that Trade War 2.0 isn't looming— “it's already here”.
On April 4, China responded to US tariffs imposed by President Donald Trump with a series of countermeasures, including 34 per cent additional duties on all American goods and export curbs on certain rare earth elements— further escalating the trade war between the world’s two largest economies. US exporters now face the world’s second-largest economy closing its doors, points Khatri in a series of posts on X. China ranks as the United States' second-largest source of imports, following Mexico, and its third-largest export destination, after Canada and Mexico, according to a report in New York Times.
Meanwhile, its biggest imports from the US are soybeans, oilseeds and grains, amounting to $13.4 billion in 2024, as well as $14.7 billion of various fuels and $15.
3 billion of electrical machinery, Reuters reported citing US trade data. Beijing also announced controls on exports of medium and heavy rare-earths including samarium, gadolinium, terbium, dysprosium, lutetium, scandium and yttrium to the United States, effective April 4. It added 16 US entities to its export control list, restricting the export of dual-use items to these companies.
In addition, 11 more US firms have been placed on the "unreliable entity" list, enabling Beijing to impose punitive measures against them. According to Khatri, China’s strategic retaliation equals American supply chain pain. “China’s not yelling – it’s acting,” he says pointing that the country is redirecting exports to ASEAN, pushing digital yuan and weaponising supply chain dependencies.
US companies, on the other hand, scramble to find alternative suppliers and routes. “The US has market muscle. But China has supply chain leverage.
This isn’t about who tweets louder, it’s about who bleeds longer,” Khatri writes in his post. Trump slapped the world's number 2 economy with additional 34 per cent tariffs on Chinese goods, bringing the total new levies this year to 54 per cent. He also closed a trade loophole that had allowed low-value packages from China to enter US duty-free.
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