China Plays Poker: Tariffs, Trade War and Critical Minerals

In the latest round of trade tensions, China up a new ante. They placed tariffs on 15% on coal and liquefied natural gas. China also slapped a 10% tariff on crude oil, machinery used in agriculture and big-engine cars imported from the U. S. That is not all. They are also investigating Google for anti-trust law violations. Which by the way has been a sore point between Chinese phone manufacturers and Google. The Chinese government announced big changes to their export controls. This is interesting because they are not the only players in this game. The U. S. has also been making changes to their export controls. This seems like the U. S. and China are playing a game of one-upmanship. Chinese government said the United States' tariff increases are breaking rules set by the World Trade Organization. China was not the only country that Trump slapped tariffs on. The U. S. was set to implement tariffs on products from Canada and Mexico. However, Trump agreed to a 30-day break while he talked things out with President Xi. China planned these moves to show the U. S. the outcome of a tariff increase. China is hoping to prevent the escalation of tariffs.

China's trade war strategy is more well-rounded this time. They have planned it across several sectors. This time around, China is ready to play hardball. They are cutting down on exports of key minerals. They are important for the U. S. for both economy and national security. China has been doing this since December and is now getting serious about the discussion. Google is a big player in the tech world. China just started an investigation into Google's business practices on suspicion of violating antitrust laws. It could potentially limit Google's reach in China. The internet giant withdrew from China in 2010 and has since struggled to return to the market due to China's strict censorship laws. U. S. companies could also face bigger problems. The Chinese Commerce Ministry added two U. S. businesses to an"unreliable entities" list. Which means they have to cut off trade with them. The Chinese response is seen as a calculated step to get the attention of the U. S. However, the world is preparing for a tit-for-tat trade war. This could slow down GDP growth, push up inflation, and create uncertainty. The Chinese government has been busy. They are setting up export controls on key minerals. This is to show the U. S. that they will not back down. The U. S. is heavily reliant on these minerals. They are vital for the U. S. economy and security.

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