China preparing countermeasures to US tariff threat

China is preparing countermeasures against fresh US import tariffs set to take effect on Tuesday, China's state-controlled Global Times reported, raising the prospect of an all-out trade war between the world's top two economies.

Last week US President Donald Trump threatened China with the extra 10 per cent duty, resulting in a cumulative 20 per cent tariff, while accusing Beijing of not having done enough to halt the flow of fentanyl into America, which China's commerce ministry said was tantamount to "blackmail."

"China is studying and formulating relevant countermeasures in response to the US' threat of imposing an additional 10 per cent tariff on Chinese products under the pretext of fentanyl," Global Times reported on Monday, citing an anonymous source.

"The countermeasures will likely include both tariffs and a series of non-tariff measures, and US agricultural and food products will most likely be listed," the report added.

Global Times, which is owned by the newspaper of the governing Communist Party, People's Daily, was first to report the steps China planned to take in response to the European Union slapping tariffs on Chinese electric vehicles last year.

Trump's announcement left Beijing with less than a week to come up with countermeasures or strike a deal. The proposed extra levies also coincide with the start to China's annual meeting of parliament, a political set piece event at which Beijing is expected to roll out its 2025 economic priorities.

Analysts say Beijing still hopes to negotiate a truce with the Trump administration, but with no signs of any trade talks the prospect of a rapprochement between the two economic giants is fading.

The US has long been vulnerable to China using its agricultural products as a punching bag in times of trade tensions.

China remains the biggest market for US agriculture products despite a decline in imports since 2018, after Beijing slapped tariffs of up to 25 per cent on soybeans, beef, pork, wheat, corn and sorghum in retaliation for duties on Chinese goods imposed by Trump.

Beijing has since 2018 pushed to diversify sourcing and raise domestic output in its quest for greater food security.