China retaliates against US tariffs - but it also wants to talk

"China will fight to the bitter end of any trade war," the foreign ministry spokesperson in Beijing declared, after China announced tit-for-tat tariffs on agricultural imports from the US.

This came within minutes of a new 10% US levy on Chinese imports that came into effect on Tuesday - which adds to existing tariffs both from Trump's first term and those announced last month.

But China's latest retaliatory measures are an opening swing, not a direct punch.

It shows some strength, and it has the potential to sting parts of the United States, but also leaves room to negotiate or escalate if necessary.

"We advise the US to put away it's bullying face and return to the right track of dialogue and co-operation before it is too late," foreign ministry spokesperson Lin Jian added.

This is the second round of tariffs the two countries have imposed on each other since February. But this time China is hitting Donald Trump where it has the potential to hurt - by targeting farmers, who are some of his core supporters.

Almost 78% of farming-dependent counties in the US endorsed Mr Trump in 2024.

China is one of their biggest customers for produce such as chicken, beef, pork and soybeans and now all those products will face a 10-15% tax which will come into effect on 10 March.

"The tariffs are broadly negative for US agricultural markets. It is going to have a bearish influence on prices. There are enough corn and soybean supplies in the world for China to make a switch, it is more of an issue for the US, because 30% of US soybeans still go to China," Ole Houe, of Ikon commodities, told Reuters news agency.

Beijing may hope that this will apply some pressure on the Trump administration ahead of any potential negotiations.

The latest announcements raise the prospect of an all-out trade war between the world's top two economies and in various ministry statements, China is making two things very clear.

Firstly, it is prepared to continue to fight.

"Pressure, coercion and threats are not the right way to deal with the Chinese side," said Mr Lin.

But secondly, it is also willing to talk.

Beijing is not ramping up the rhetoric or the tariffs in the same way it did in 2018, during the last Trump administration. Back then it imposed a tariff of 25% on US soybeans.

"China's tariffs impact a limited number of US products, and remain below the 20% level. This is by design. China's government is signalling that they do not want to escalate, they want to de-escalate," according to Even Pay, an analyst with Trivium China.

The prospect of talks was raised last month.

The White House said there would be a call between President Xi and Donald Trump. That never happened.

So will these talks take place and who will make the first move?

China is unlikely to want to go first. It will not want to be seen kowtowing to Washington.

And in contrast to Canada and Mexico, Beijing has not announced new measures to target the flow of fentanyl. It simply repeated past statements that fentanyl is a "US problem" and that China has the strictest drug policies in the world.

On Tuesday, the State Council released a White Paper entitled "Controlling Fentanyl-related substances - China's contribution."

It outlines the measures Beijing says it has already made to crack down on Fentanyl-related crimes and the precursor chemicals used to make the drug. It adds that it is "diligently fulfilling international drug control obligations".

So, while China hasn't picked up the phone to Washington, this document forms part of the country's message which appears to be saying - we are already doing what we can on fentanyl.

Despite stating that China "will not yield", these latest tariffs are bound to sting.

The cumulative 20% tax on all Chinese goods comes on top of a slew of tariffs Trump imposed in his first term on tens of billions of dollars of Chinese imports. And China's population is already concerned about a sluggish economy.

Thousands of delegates are gathering in the capital this week to take part in an annual parliamentary session, most of which will focus on the economy.

House prices are still falling, and youth unemployment remains stubbornly high. A potential trade war with the US could prompt more money worries for businesses and consumers across the country at a time when the Communist Party wants people to spend to help the economy to grow.

But Beijing will also see an opportunity as Donald Trump sows uncertainty among his international allies.

It can partly place the blame for any further economic woes at Washington's door and state that it's the fault of the US for starting a trade war.

The state media outlet Xinhua has in recent days released a series of parodies poking fun at a United States that is prepared to tax its allies and neighbours. The skits portray Washington as a bully echoing the words coming from the leaders of Canada and Mexico.

At the same time, China's Commerce Ministry has reiterated that it is prepared to work with other countries around the world to combat Mr Trump's tariffs.

Beijing appears to be looking for potential allies in this trade war while also trying to cast Washington as a troublemaker who is prepared to target friends and foes alike.

All at a time when Donald Trump's 'America First' doctrine has many in Europe and the UK wondering if the US-led world order is already in doubt.