On Monday, President Trump threatened China with an additional 50% tariff on goods imported into the U.S. if Beijing didn't withdraw its 34% counter-tariff. Hours later, China's Ministry of Commerce vowed to take "countermeasures" and said it "will fight to the end" of the trade war. Two top Chinese bloggers leaked some of those potential countermeasures on Tuesday.
A flurry of headlines overnight helped stabilize Asian equity markets. According to Goldman analyst Shubham Ghosh, some of those headlines included, "Consumption boost, leadership onshore willing to front-load stimulus, PBOC vowing sufficient funding, all adding up."
"Onshore A-shs had a much better price action where the start was slow and it gradually picked up momentum towards the close – National team support speculated as notably combined turnover of the ETFs favoured by them hit a massive 92 bn Yuan," Ghosh told clients.
We detailed overnight the commerce ministry's threat to take "countermeasures" to defend its "rights and interests" should Trump fire off another round of tariffs. One key line from the ministry should keep traders up at night:
"China will never accept this. If the U.S. insists on going its own way, China will fight it to the end."
In addition to the commerce ministry's comments, two top Chinese bloggers have potentially leaked Beijing's next moves, which could target everything from U.S. poultry and agricultural goods to Hollywood films—and even include a suspension of China-U.S. cooperation on fentanyl-related issues.
Bloomberg noted that Liu Hong, a senior editor at Chinese media outlet Xinhuanet, and Chairman Rabbit, the social media handle for Ren Yi, the Harvard University-educated grandson of former Guangdong party chief Ren Zhongyi, released an identical set of countermeasures that Beijing has mulled over to counter Trump.
Hong operates the account Niutanqin, which listed the potential countermeasures:
We have also received some latest news on specific countermeasures against US tariffs . China has prepared at least six major measures.
1. Significantly increase tariffs on U.S. agricultural products such as soybeans and sorghum.
Sources said that in view of the recent bullying behavior of the United States, China is considering significantly increasing tariffs on U.S. agricultural products such as soybeans and sorghum.
2. Prohibit the import of U.S. poultry meat into China.
Sources pointed out that in view of the frequent outbreaks of avian influenza in the United States, relevant parties strongly recommended that China ban the import of American poultry to ensure the food safety of the Chinese people.
3. Suspend China-US cooperation on fentanyl.
It was revealed that the Chinese government is considering stopping its fentanyl cooperation with the U.S. due to the U.S.'s threat to impose another 50% tariff. The reason is simple: the U.S. has completely ignored China's humanitarian assistance, not only does it not understand China's sincerity and goodwill, but it has also smeared, blamed and shifted the blame, which has seriously damaged the foundation of China-US fentanyl cooperation.
4. Countermeasures in the services trade sector.
The source also revealed that this includes restricting U.S. companies from participating in procurement and restricting business cooperation such as legal consulting. The U.S. has a long-term trade surplus in services with China, and the so-called "reciprocal tariffs" of the U.S. government will undoubtedly bring serious crisis to the U.S. service exports, which currently have a huge trade surplus.
5. Ban the import of American films.
According to relevant experts, in view of the U.S. threat to escalate tariffs on China , relevant departments are studying reducing or even banning the import of American films.
6. Investigate the benefits that U.S. companies have gained from intellectual property in China.
According to sources, in view of the huge monopoly profits obtained by relevant U.S. companies in China, relevant departments are studying to investigate the above situation.
"After all, China today is no longer the China of 100 years ago, 40 years ago, or four years ago. We have experienced too many ups and downs. We know clearly that we still face many challenges and difficulties, but we believe that we are on the right side of history," the Niutanqin account said.
Niutanqin warned: "If you mess around, you will have to pay for it. The storm brought to the United States by the tariff war has just begun."
