China’s latest round of retaliatory tariffs took effect Monday, hitting roughly $14 billion worth of U.S. goods and raising concerns about disruptions in critical supply chains. The new measures, which impose 10% to 15% taxes, target American liquefied natural gas (LNG), coal, crude oil, farm equipment, and select automotive goods.
The move comes in response to the U.S. government’s recent 10% tariff on Chinese imports, which President Donald Trump has called an “opening salvo” in a renewed trade offensive against China. While Beijing’s tariffs are more targeted than the broad U.S. levies, analysts say they could significantly impact industries that rely on Chinese trade.
Energy Supply Chains at Risk
One of the most immediate effects of China’s tariffs will be on the energy sector, where U.S. exports of LNG, coal, and crude oil will now face new cost barriers. China is one of the fastest-growing LNG markets, and U.S. producers could see reduced demand as Chinese buyers turn to alternative suppliers.
“Chinese companies will likely hunt for other spot sources, such as those from Asia,” Alex Siow, an analyst at ICIS, told Reuters. “It might not be easy to find, though, given that 2025 continues to be a tight market.”
Manufacturing & Agriculture Face Higher Costs
The 10% tariff on U.S. agricultural machinery, including farm equipment, poses challenges for American manufacturers. Kip Eideberg, Senior Vice President at the Association of Equipment Manufacturers (AEM), stated, “The fact remains: tariffs are a tax paid by Americans, and their broad-based application will stifle economic growth and undermine the competitiveness of the United States.”
China’s latest restrictions on rare earth exports—critical for electric vehicle (EV) batteries, defense equipment, and green energy technology—add another layer of uncertainty. With China controlling about 60% of global rare earth production and 90% of processing, U.S. companies could face sourcing challenges and rising material costs.
Another Trade War?
The escalation in tariffs raises fears of a renewed trade war between the world’s two largest economies, with businesses caught in the middle. Trump has already signaled that more tariffs could be coming, including a 25% levy on all steel and aluminum imports and potential new taxes on European and Taiwanese goods.
While China’s response has been measured compared to previous trade disputes, experts warn that the situation could deteriorate quickly. Beijing has also launched an antitrust investigation into Google, blacklisted U.S. clothing brands Calvin Klein and Tommy Hilfiger, and restricted exports of five critical minerals used in clean energy and defense production.
For now, supply chain leaders are bracing for more disruptions with no clear resolution in sight. Businesses will need to reassess sourcing strategies, navigate shifting trade policies, and prepare for potentially higher costs in 2025.