US-China tariff war 2.0 kicks off - ABN AMRO

Global Macro: US imposes 10% China tariffs. Beijing retaliates immediately, in a targeted, measured way. 10% US tariffs not a game changer, but more could come, ABN AMRO Senior Economist Arjen van Dijkhuizen notes.

Tariffs on China may move much higher if no agreement is reached

"Immediately after the US tariffs went into effect, Beijing responded by imposing a 15% tariff on LNG and coal imported from the US, and a 10% tariff on crude oil and agricultural equipment. That is a measured, non-proportional reaction, in line with our expectations, leaves the door open for further negotiations, and does not disturb China's commodity inflows that much. In 2024, around 6% of China's total LNG imports came from the US, while China hardly imports any coal from the US."

"China also announced it would put Google under investigation for antitrust violations, while putting another two US firms (including PVH Corp, the owner of Calvin Klein) and widening exports controls to the US with tungsten-related materials. Beijing also stated it had filed a complaint with the World Trade Organization in response to the new US import tariffs."

"Although the first tariff implementation now seems to have come even earlier than anticipated in our Global Outlook, The Year of the Tariff, in our base case we already anticipate a material (gradual) stepping up of US import tariffs on China to an average effective tariff rate of 45% per Q2-2026. While talks between Trump and Xi may potentially smoothen the risk of a further escalation for now, Trump stated earlier this week that he sees the 10% tariffs as a first salvo, with tariffs on China potentially moving much higher if no agreement is reached."