US Soybeans and Energy Hit Hard as China Strikes Back with Tariffs

US agricultural exports, fuels and manufactured goods are set to take a hit from China's blanket retaliation against President Donald Trump's sharp tariffs, with both sets of measures due to take effect next week.

After Trump announced a 34-percent new tariff on imports of Chinese goods -- taking the added rate imposed this year to 54 percent -- Beijing said it would slap an equivalent across-the-board tariff on US goods, among other countermeasures.

China used to target specific industries in a "mirror response" to US export restrictions, said Emily Benson of consulting firm Minerva Technology Policy Advisors.

But its broader plan unveiled Friday marks a "pretty significant warning shot" to the Trump administration to hold off further measures, she told AFP.

What is the state of US-China trade, and what US sectors stand to be impacted?

US exports

The United States exported $144.6 billion in goods to China in 2024, much less than the $439.7 billion it imported, Commerce Department data shows.

Among its exports, key sectors include electrical and electronic equipment and various fuels, alongside oilseed and grains.

But China likely has more confidence to retaliate this time compared with Trump's first presidency, when he engaged in a tit-for-tat tariff war with Beijing.

"Although the U.S. remains a highly significant market, fewer companies are now critically reliant on American suppliers," stated Lynn Song, ING’s chief economist for Greater China.

She mentioned that Beijing has likewise been making strides toward achieving technological independence.

Agricultural goods

"The US farmers will face significant challenges," stated Wendy Cutler, Vice President at the Asia Society Policy Institute.

Their agricultural exports to China could "become too expensive to be competitive" with Beijing's added tariffs, she told AFP.

Soybeans, oilseeds, and specific grains constituted a crucial American export to China, totaling $13.4 billion last year, according to US trade statistics.

"China bought 52 percent of our (soybean) exports in 2024," said American Soybean Association chief economist Scott Gerlt.

Considering the scale of its buys, China can't readily be substituted, he informed AFP.

Soybean prices plunged on Friday's news.

Fuels, machinery

Last year, China imported $14.7 billion worth of different fuels and oils from the United States.

Tariffs could impact the oil and gas industry in states like Texas, which alongside Louisiana saw such exports to China surge in 2023, said a US-China Business Council report.

And the US exported some $15.3 billion in electrical machinery to China last year, official trade data showed.

However, shipments of semiconductors have declined due to the increasing U.S. export restrictions on advanced technology.

Chips impact

Besides tariffs, China has restricted exports of rare earth elements and taken action against US firms -- including drone companies and those in the defense and aerospace sectors.

"Benson from Minerva Technology Policy Advisors stated that China is responsible for approximately 69 percent of rare earth element extraction and around 90 percent of their processing," he noted.

"That's going to probably be a chokepoint moving forward," she added. This could affect semiconductor manufacturing, magnets, optics and lasers.

"Of course, some of these are aimed at chips," she stated.

As both Washington and Beijing escalate their confrontation using various tactics, Benson cautioned that the U.S. remains particularly vulnerable to China’s economic measures. He emphasized the necessity for the U.S. to develop an effective industrial policy that includes significant financial support to boost local manufacturing capabilities.