Export controls, restrictions or devalue Yuan, Beijing Options against Trump

China could respond to 10% tariffs imposed by Donald Trump With new export controls, including critical minerals for the manufacture of chips, restrictions on access to its market, a devaluation of Yuan or imposing rates on products from the North American country.

Beijing promised retaliation against tariffs on Sunday, imposed by Washington on account of the fentanil (WTO)although he has not yet specified what his answer will consist.

In recent days, the official press of the Asian country has defended that the taxes will be “counterproductive”, which “will alter the operation of global supply chains” and that “they will give rise to an increase in prices of the imported goods in USAwhich will increase the burden on its consumers and undermine the competitiveness of their companies. ”

What options does Beijing have?

As in previous commercial rifirrafes with its great rival, China It will seek to harm sectors of the US economy without excessively harming its growth.

In that scenario, new restrictions would enter the export of materials such as Germanio, Gallium, Antimony and Graphite, keys in the manufacture of semiconductors and batteries, according to some experts.

“The options include export controls of these critical minerals, but also restrictions on access to the Chinese market for US companies,” The economist Gary Ng tells Bloomistg, although other analysts suggest that the increase in rates could be ‘absorbed’ through exchange rates, through a devaluation of the Yuan, the Chinese currency.

It should be remembered that, in 2019, China allowed Yuan to fall at its lowest level in a decade so that its exports were more competitive and thus overcome the first Trump tariffs.

And it is that during his first presidency (2017-2021), the tycoon maintained a tense relationship with Beijing by imposing several batches of rates worth US $ 370,000 million annually, to which China responded with taxes to US exports.

Thus, new Chinese tariffs could be on the table to American products in sectors such as agricultural, and there would be soybeans, one of the main exports from the United States to China, in addition to pig, beef and corn.

To this could be added more restrictions on the investments of US companies in Chinese territory or “investigations for not complying with Chinese regulations” such as to which the Fedex firm was submitted in the summer of 2019.

Damage to Chinese exports

On the other hand, analysts of Goldman Sachs They say today in a note issued to their subscribers that China could be “harder in the rhetoric” than in practice. They argue that in Beijing they expected “something worse”, and that “they are likely to react moderately, adjusting the course later if they consider it necessary.”

Likewise, Bloomberg estimates that Trump’s tariffs could dilate 40% of Chinese goods exports to the United States, “endangering 0.9% of the GDP” of the Asian giant.

In addition, the Chinese economy does not face the sending in the same way that faced the First Commercial War: the country reached its annual growth objective of 5% in 2024, but it still tries to straighten its economy in the midst of low demand internal and the real estate crisis, which has left exports as a key growth engine.

According to Wang Zhe, economist of the Caixin Financial Portal, the Chinese industry is experiencing a slowdown and exterior orders have been reducing “in the midst of the growing challenges in global commercial policies.”

“The growing uncertainty could worsen the export environment of China, which would raise significant challenges for its economy”, He warns.

Meanwhile, economist Tao Wang points to Financial Times that tariffs have “a broad scale” and that several key sectors of the Chinese economy are expected to affect significantly.

Among them, the manufacturing, especially that of electronics, since tariffs will increase the costs of Chinese products in the US market, “reducing their competitiveness and demand.”

The textile sector would also be affected -it would apply for US consumers to look for alternatives to Chinese garments -the automotive and technological.