Beijing strikes back against Trump's tariffs, Plus China gains speed in nuclear fushion research -- China Boss News 2.07.25
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What Happened?
In a dramatic retaliation against Trump's tariffs, Beijing struck back on Tuesday, unveiling a suite of measures that sent shockwaves through global markets.
China's countermeasures, set to go live on February 10, include a combination of 10% and 15% tariffs on American coal, liquefied natural gas (LNG), crude oil, and essential industrial exports like agricultural machinery and large-engine vehicles.
The US is not a significant coal supplier to China; only 6.4 percent of US coal is exported to China.
However, although China accounted for roughly 10 percent of US LNG exports last year, analysts said that figure is almost twice as high as it was in 2018, the last time the US and China faced off in a trade conflict.
Despite suggestions that China's response was "measured," Beijing's message was loud and clear: China will meet US pressure head-on and defend its economic power by hitting back.
The latest reports indicate that negotiations are not off the table for Beijing and Trump, but as the ongoing and escalatory tit-for-tat shows, neither is economic warfare.
Why It Matters.
Setting precedent
In the latest escalation, China also tightened its stranglehold on rare earth minerals critical to global tech production, including tungsten, tellurium, bismuth, molybdenum, and indium products —metals that power advanced semiconductors, batteries, and defense systems.
Even though experts interviewed by the Wall Street Journal said the controls would not significantly affect US businesses, other exporters must now jump through bureaucratic hoops to obtain licenses from the Ministry of Commerce.
China's controls don't target specific countries, and the US already produces significant amounts of molybdenum while importing very little from China.
In 2024, the Biden Administration imposed 25% tariffs on indium and tungsten to encourage diversification in the supply chain, and US industries have been working on decreasing their dependence.
But Beijing calibrated its new restrictions to serve as a not-so-subtle reminder: China is still the main source of tungsten.
Due to its high melting point and hardness, tungsten is used in manufacturing light bulb filaments, cutting tools, and armor-piercing projectiles. Any supply disruption will certainly be felt in various US sectors, including defense. It is also commonly found in electrical contacts and aerospace components.
Industry experts were already bracing for the prospect of new Chinese curbs on tungsten. Click on the link below to read more.
As if that weren't enough, China's State Administration for Market Regulation (SAMR) launched a high-profile antitrust probe into whether Google's Android system monopolizes competition and undermines Chinese smartphone giants like Oppo and Xiaomi.
Although Google's search engine is blocked in China, the tech titan's advertising and cloud services have managed to quietly thrive there.
But Beijing's warning to American Big Tech didn't end there—Nvidia's business dealings, including its controversial Mellanox acquisition, were subjected to renewed scrutiny, and whispers of a probe against Intel have surfaced, according to Financial Times.
China has also placed US firms PVH Corp (owner of Calvin Klein and Tommy Hilfiger) and biotech giant Illumina on its "unreliable entity list."
The designation isn't just a slap on the wrist—it could mean crippling trade restrictions, steep penalties, and restrictions on their investments.
Finally, US tech giant Apple, which is deeply intertwined with China's economy, saw its stock plummet 2.6% in premarket trading after reports surfaced that Chinese authorities are weighing an investigation into Apple's App Store policies.
Regulators say they are concerned about its 30% commission on in-app purchases.
For Apple, which relies on China for nearly 20% of its revenue, such a probe would directly hit its business model.
Investors told Bloomberg that China's newest regulatory action could set a precedent, leading to tighter controls on Apple and other US tech companies operating in the region.
Ripple effect
The reverberations of the latest developments aren't confined to the US and China.
European economies are bracing for impact as disinflation and sluggish growth loom on the horizon.
According to Politico, Brussels is realizing it may need to align with Trump's trade war against China, and there is concern that a surge of Chinese exports could flood into Europe due to high US tariffs.
Anthony Gardner, a former U. S. ambassador to the EU, pointed out that the primary concern is not NATO or Ukraine but how Chinese exports shifting from the US to Europe could affect European industries already struggling to survive.
The shift could drive deindustrialization and fuel the rise of populist, right-leaning parties that present extreme solutions to economic challenges.
While Europe would indeed be affected by the US trade war with China, especially with Germany expected to experience negative growth, studies show that the EU may suffer less than other regions. The Kiel Institute for the World Economy estimates a GDP drop of 0.14 percent in the first year.
Meanwhile, the stand-off between the US and China is quickly reshaping international supply chains.
Financial Times said in a separate report that Chinese manufacturers are fast-tracking relocations to tariff-friendly zones like Vietnam, Mexico, and parts of the Middle East to dodge US duties.
US companies, in turn, are diversifying their imports, signaling a seismic shift in global trade flows that could permanently alter economic relationships.
For businesses caught in the crossfire, the new trade conflict has morphed into a high-stakes survival test.
The once-predictable norms of global business have given way to an era of volatility, where political maneuvering and retaliatory strikes disrupt market stability.
Trump, once poised to engage in talks with Chinese President Xi Jinping, has more recently expressed hesitance, stating he's in "no rush."
On China's side, officials appear to be keeping their cards close, selecting measures that deliver maximum pressure with the scent of - but without actually provoking - a full-scale economic war.
Analysts warn that the world economy will remain caught in the middle until both sides agree to return to the negotiating table.
But, in the grand scheme of things, trade is merely one of many friction points in US-China relations, where competition for the future of technology, resources, and global dominance is just getting started.
This Week's China News
The Big Story in China Business
CHINA GAINS SPEED IN NUCLEAR FUSION RESEARCH: China is rapidly advancing nuclear fusion research to harness a virtually limitless, clean energy source by replicating the sun's power.
According to CNN, recent satellite images reveal the construction of a massive fusion research facility near Mianyang in Sichuan province, reportedly 50% larger than the US National Ignition Facility.
Decker Eveleth, an analyst at the US-based CNA Corporation who has been monitoring China's nuclear development efforts "for years," told news staff that, in 2020, the site was merely "a patch of dirt."
Possible breakthrough: At China's Experimental Advanced Superconducting Tokamak (EAST) facility in Anhui, China, closer to the coast, scientists reported setting a world record by sustaining plasma at over 100 million degrees Celsius for 1,066 seconds—an achievement that, if it occurred, would bring researchers closer to controlled nuclear fusion.
Unfortunately, scientific fraud is all too common in China. Read more about it here (The Economist) and here (Financial Times). So we'll need to hold our applause until after independent verification of the news.
Big spender: With an estimated annual investment of $1 to $1.5 billion, however, China is outpacing US funding, positioning itself as a global leader in the fusion race.
If successful, nuclear fusion could revolutionize energy production, significantly reducing dependence on fossil fuels and supporting climate goals.
Nukes: Experts also note that fusion research has potential applications in materials science, plasma physics, and nuclear weaponry.
Both China and the US are signatories of the Comprehensive Nuclear Test Ban Treaty, which prohibits nuclear detonations.
Simulating the energy released from nuclear weapons remains a significant challenge, even with advanced computational methods.
Laser-ignition fusion facilities can aid these simulations by replicating the extreme conditions present in the first moments of a nuclear detonation.
"Any nation with a facility similar to NIF can enhance their confidence in and refine existing weapon designs," explained William Alberque, a nuclear policy analyst at the Henry L. Stimson Center, in an interview with Reuters.
Law and International Xi
EU TARGETS CHINESE RETAIL GIANTS IN ECOMMERCE CRACKDOWN: The European Commission is stepping up its fight against a tidal wave of low-cost imports flooding in from Chinese e-commerce platforms like AliExpress, Shein, and Temu.
Reuters said that in 2024 alone, a staggering 4.6 billion low-value packages—12 million daily—poured into the EU, with over 91% coming from China.
The parcels, often dodging duties thanks to loopholes in customs law, have alarmed European countries about issues such as consumer safety, environmental harm, and cutthroat competition threatening European businesses.
Flexing muscle: In a bold move, the Commission rolled out a sweeping crackdown plan featuring tougher customs checks, stricter product inspections, and newly imposed import handling fees.
Officials announced that Shein is now under investigation for possible consumer protection violations, while Temu faces heat over illegal product listings and manipulative online practices.
In response, Shein struck a cooperative tone, saying it welcomes efforts to boost trust and safety in European online shopping.
Deepening hostility: The regulatory push reflects deepening international hostility over China's trade practices.
On the other side of the Atlantic, US President Donald Trump fired his own shots, reinstating tariffs on Chinese goods and revoking duty-free privileges on low-value imports.
The US Postal Service (USPS) briefly halted but quickly resumed parcel deliveries from China and Hong Kong after President Trump revoked the "de minimis" exemption, which allowed low-value imports under $800 to enter duty-free.
According to Reuters, the change created widespread confusion among retailers and shipping companies like Shein, Temu, and Amazon.
Over 1.36 billion shipments entered the US duty-free in 2024, driven by e-commerce giants like Shein and Temu, which together accounted for nearly a third of daily imports under the exemption.
Geopolitics
TRUMP RENEWS THREAT OVER PANAMA CANAL AMID RISING CHINESE INFLUENCE: President Donald Trump has reignited international tensions, threatening to "take back" the Panama Canal over concerns about China's expanding presence near the critical trade passage.
On Sunday, Trump told reporters that Chinese influence violates neutrality agreements established when the US transferred control of the canal to Panama, hinting at potential "powerful" US action if the issue persists.
Only hours earlier, US Secretary of State Marco Rubio had met with Panamanian President Raúl Mulino to ease tensions and reaffirm cooperation.
Break with the BRI: Mulino, standing firm on Panama's sovereignty, declared the canal was not up for negotiation.
But, in a strategic pivot, he announced Panama's intention to terminate a 2017 Belt and Road Initiative agreement with China and launched an audit of Hutchison Ports, a Hong Kong-based company operating terminals near the canal.
Despite US concerns, Mulino assured us that canal access would remain under Panamanian control.
The Panama Canal has become even more essential to international commerce, handling 6% of global trade. While Trump's threats of military action are unlikely to materialize, many experts share his concerns over China's growing control of global port infrastructure.
Experts worry: Jennifer Parker, a specialist in maritime affairs and national security, emphasized that although Panama manages the canal, Chinese firms hold key port concessions at both ends.
Landbridge, a Shandong-based Chinese company, controls Margarita Island, Panama's largest port, while CK Hutchison Holdings—a Hong Kong firm operating Australian ports in Sydney and Brisbane—manages the canal's key Balboa and Cristobal terminals.
Parker noted that China's 2020 national security laws could allow the Chinese government to influence these ports through corporate channels.
"Even though China does not directly control the canal, it holds significant sway at both its Pacific and Atlantic entrances," she explained.
"Coupled with a major uptick in Chinese investment in Panama, underscored by Panama's decision to join China's Belt and Road Initiative in 2018, this port ownership provides China with a strategic foothold in the region," Parker added.
Best Reads
USAID Should Be Retooled, Not Destroyed (Michael Sobolik, Providence Magazine): Sobolilk warns that dismantling key programs - particularly those countering China's global influence, like USAID—could undermine national security and US soft power abroad.
In freezing foreign aid, the US leaves people to die – and allows China to come to the rescue (Melissa Conley Tyler, The Conversation): Conley argues that the sudden suspension of US foreign aid programs under Trump's executive order weakens US soft power and opens the door for nations like China to expand their influence.
ChatGPT vs. Claude vs. DeepSeek: The Battle to Be My AI Work Assistant (Joanna Stern, Wall Street Journal): Stern reviews AI assistants ChatGPT, Claude, and DeepSeek for tasks such as research, project management, and communication.
Middle Kingdom Surreal
CHINA WATCHERS CRITICIZE TRUMP'S MOVES ON USAID: Only two weeks into his second term, President Donald Trump has moved swiftly to reshape US foreign aid and counter China's influence, sparking both praise and backlash.
Guided by Elon Musk's Department of Government Efficiency (DOGE), Trump froze USAID funds, shut down its Washington office, and recalled staff abroad.
The White House cited "wasteful spending" on projects like LGBTQ and arts initiatives, which some foreign officials claimed hindered cooperation under Biden's administration.
Michael Sobolik, a senior fellow at Hudson Institute who specializes in United States–China relations and great power competition, said that although reforming USAID was a good idea, abrupt cuts that threaten programs vital to US interests, particularly those countering China, would be problematic.
USAID-backed initiatives, such as telecommunications projects in Palau and emergency systems in Taiwan, have strengthened allies against Beijing's Belt and Road ambitions.
However, nonprofits monitoring China's media censorship and human rights violations are now in crisis, facing job losses and shutdowns due to the funding freeze.
Bethany Allen, ASPI's head of China investigations and analysis, wrote that the groups "provide our last window into what is actually happening in China" by "do[ing] the painstaking and often personally risky work of tracking Chinese media censorship, tallying local protests, uncovering human rights violations, documenting the Uyghur genocide, and supporting what remains of civil society in China.
"The research and other work done by these nonprofits is invaluable. It largely isn't replicated by think tanks, universities, private firms, or journalists. If it disappears, nothing will replace it, and Beijing's work to crush it will be complete," she warned.
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