China Retaliates Against US Tariffs with New Agricultural Tariffs and Trade Restrictions

China has announced retaliatory tariffs on key United States (US) agricultural products, expanding economic countermeasures in response to new US tariff increases. The Chinese Ministry of Commerce confirmed on March 4 that additional tariffs of up to 15% would be imposed on a range of American farm products, including chicken, pork, soybeans, and beef. These new tariffs, set to take effect on March 10, come after the US raised tariffs on Chinese imports to 20% across the board.

Figure 1: Tariffs on US Exports

The affected products, which also include wheat, corn, cotton, seafood, fruits, vegetables, and dairy, represent a major segment of US agricultural exports to China. Goods already in transit before the deadline will be exempt until April 12. The move signals a deepening trade dispute between the world’s two largest economies, with significant implications for global agricultural trade flows.

Trade Disruptions and Market Impact

China remains a critical importer of US agricultural commodities, with American farm exports to China totaling USD 24.7 billion in 2024, accounting for 14% of US total farm exports. However, the trade relationship has been filled with tensions since the initial tariff war launched during former US President Donald Trump’s administration. While trade volumes recovered in subsequent years, the latest escalation could once again disrupt long-established supply chains.

China’s retaliatory measures include:

• A 15% tariff increase on US chicken, wheat, corn, and cotton.
• A 10% tariff increase on soybeans, pork, beef, seafood, fruits, vegetables, and dairy products.
• The suspension of import qualifications for three major US soybean suppliers due to alleged contamination with ergot fungi and seed-coating agents.

This response from Beijing demonstrates China’s intent to reduce dependence on American agricultural products while encouraging trade diversification with other exporting nations. China has already expanded soybean purchases from Brazil and Argentina, reinforcing its strategy to mitigate supply chain vulnerabilities in light of geopolitical tensions.

Strategic and Political Implications

The tariffs and trade restrictions come just as China prepares for its annual parliamentary session, where economic challenges, including deflation and slowing growth, are key agenda items. By taking a firm stance against US tariffs, China is signaling its willingness to push back against what it sees as unfair trade policies.

Despite the escalating trade conflict, analysts suggest that both sides are exercising some restraint, leaving the door open for negotiations. According to Beijing’s Tsinghua University, despite high tensions between the town nations, a long-term trade deal remains a possibility. However, the current political and economic climate does not favor immediate resolution.

Market Outlook and Future Trade Dynamics

The new tariffs could have a significant impact on US agricultural exports, potentially reducing demand from one of the largest markets for American farm goods. The diversification of China’s supply sources—particularly its increasing reliance on South American agricultural products—suggests that US producers may face longer-term shifts in trade dynamics.

For global agricultural markets, China’s shifting sourcing strategies could create opportunities for other major exporters, including Brazil, Argentina, and Canada. Additionally, price volatility in commodities such as soybeans and pork may increase as global supply chains adjust to the new trade barriers.

While trade disputes between the US and China are not new, the latest developments highlight the fragile nature of their economic relationship. Moving forward, much will depend on how the US and China approach negotiations and whether diplomatic efforts can de-escalate tensions before further trade restrictions are imposed.