In a sharp escalation of the ongoing trade war between the world’s two largest economies, China has announced a series of retaliatory measures against tariffs imposed by the United States.
The countermeasures include export restrictions on certain rare earth elements vital for industries such as defense and technology.
Effective April 4, China has placed export controls on specific medium and heavy rare earths, including dysprosium, gadolinium, lutetium, samarium, scandium, terbium, and yttrium.
These materials are crucial components in the manufacturing of defense equipment and high-tech products.
The Chinese Finance Ministry has released a statement criticising the US tariffs as a “typical unilateral bullying practice” that contravenes international trade rules and “seriously undermines China’s legitimate and lawful rights and interests”.
This response follows US President Donald Trump’s decision to increase tariffs on Chinese goods by 34 per cent, bringing the total new tariffs imposed on China this year to 54 per cent.
In addition to the export controls, China will impose an additional tariff of 34 per cent on all US goods, effective from April 10.
These new tariffs supplement the 10–15 per cent levies already in place on select US agricultural and energy products earlier in the year.
China has also moved to restrict access to its markets for US entities.
Some 16 US entities have been added to China’s export control list, blocking the export of dual-use items to those companies.
The list includes 15 companies from the defense and aerospace sectors, as well as the Coalition for a Prosperous America, a group that has previously advocated for US economic decoupling from China.
Furthermore, 11 US companies have been placed on China’s “unreliable entity” list, potentially subjecting them to penalties such as bans and fines.
Among the targeted companies are Skydio and BRINC Drones, cited for supplying arms to Taiwan, which China considers part of its territory.
Financial markets have reacted to the escalating tensions, with the Chinese yuan weakening to its lowest level in seven weeks and stock markets experiencing declines following the announcement of Trump’s reciprocal tariffs.
The trade war’s intensification comes as the US Trade Representative was tasked with reviewing China’s adherence to the 2020 “phase 1” US-China trade agreement by April 1.
China has struggled to meet the deal’s requirements, which mandated an increase of US$200 billion in purchases of US exports over two years, largely due to the impact of the COVID-19 pandemic.
Last month, US President Trump invoked emergency powers to stimulate domestic output of critical minerals in an effort to reduce reliance on foreign sources, particularly China.
