The People’s Republic of China (PRC) has recently intensified its economic response to U.S. tariffs by imposing hefty taxes on imports of American products, which have now reached 125 percent on all U.S. goods.
This retaliation goes beyond mere tariffs; China has also tightened export controls on seven critical minerals, added 28 U.S. companies to its export control list, and placed 17 U.S. companies on its unreliable entity list, while instituting licensing requirements for those critical minerals.
During a recent export control work conference, China’s Ministry of Commerce asserted their aim to enhance “the modern national export control system” by improving laws and regulations, strengthening management of listed items, and fostering dialogues on export control with both multilateral and bilateral partners.
These moves indicate that China’s actions are not just short-term reactions to U.S. initiatives aimed at straining the Chinese economy, but rather represent a significant shift in both U.S. and PRC policy towards employing export restrictions as tools of weaponized economic interdependence.
In recent years, China has increasingly leveraged export controls in response to U.S. economic measures.
This strategic shift can be traced back to December 2019 when Huawei and its affiliate, HiSilicon, were placed on the Bureau of Industry and Security (BIS) Entity List.
Consequently, U.S. policy has sought to identify and exploit China’s economic vulnerabilities, often without fully considering the risks of Chinese retaliation.
As a result, China is proactively developing its capabilities to exert economic influence that aligns with U.S. strategies.
As the United States contemplates future export controls, it must conduct a thorough assessment of the potential risks posed by China, which is increasingly willing and capable of leveraging its own export controls against U.S. interests.
Utilizing the International Institute for Strategic Studies’ mapping of U.S. and Chinese export control evolutions, a recent analysis presents four case studies spanning from August 2020 to February 2025.
These examples provide substantial evidence that the development of China’s export control regime has largely been in response to U.S. actions, particularly in light of the addition of Chinese firms to the Entity List, the enforcement of the foreign direct product rule, and the restriction of semiconductor sales to Chinese end-users.
Among the key takeaways from these case studies, several important tendencies stand out:
First, China has displayed a tendency for rapid retaliation following U.S. actions.
Since the enactment of the PRC Export Control Law by the Standing Committee of the National People’s Congress, China has imposed retaliatory export controls on vital minerals and metals often within days of initial U.S. measures.
Second, the nature of these controls demonstrates a mix of targeted and broader initiatives.
Some controls specifically target the United States, such as restrictions on antimony, gallium, and germanium, while others operate under country-agnostic licensing regimes, affecting tungsten, tellurium, bismuth, molybdenum, and indium.
Third, there is a concerning trend of escalating and asymmetrical retaliation expected post-2025, particularly in response to blunt economic measures from the U.S., such as across-the-board tariffs.
As the U.S. administration examines ways to press on China’s economic vulnerabilities, it is crucial for Washington to closely contemplate the implications of such actions.
Both the United States and China possess asymmetric capabilities, and there are vulnerabilities within the U.S. that China can exploit.
For instance, in the realm of artificial intelligence development—central to U.S. export controls—China can leverage its significant production of essential components like transformers crucial for data centers and its major market share in critical minerals like antimony, gallium, germanium, and indium, which are essential for semiconductor manufacturing.
Recognizing these reciprocal dependencies should be integral to the U.S. export control strategy moving forward.
On a broader structural level, if the U.S. expands its export controls, it may prompt China to employ its emerging export control regime more proactively.
So far, the United States has managed to avoid triggering such aggressive measures from China, but this status could change if Washington proceeds to restrict Beijing’s access to U.S. legacy chips, leading to a major reshuffling of global trade dynamics as both nations restructure their supply chains.
In such an eventuality, the U.S. could find itself on the defensive, with little capacity to effectively respond.
To mitigate these risks and safeguard U.S. economic interests while preventing unnecessary escalations, policymakers should consider several strategic actions.
Firstly, conducting a cross-sectoral risk analysis should be paramount.
The Department of Commerce, in conjunction with other agencies, should spearhead an in-depth assessment of U.S. vulnerabilities associated with Chinese-controlled production processes.
Although the previous administration laid the groundwork with the Quadrennial Supply Chain Report, critical gaps remain—particularly concerning minerals and medical supply chains.
Such assessments could yield a clearer understanding of potential Chinese reactions to future U.S. export controls, which could disrupt supply chains, limit market access, and adversely impact vital industries.
In addition, this analysis would serve to inform allies and partners about the current risks in the global economy and foster scenario-based exercises to predict how escalating tensions might influence international supply chains.
Secondly, establishing formal communication channels with China is crucial.
The State Department, in coordination with the Departments of Commerce and Energy, should develop structured diplomatic engagements focused on export controls.
While dialogue alone will not resolve existing tensions, maintaining proactive communication could assist in averting unintended escalations and stabilizing economic relations.
Finally, continuous monitoring of China’s legal and regulatory shifts is essential.
Beyond trade controls, China is embedding economic security considerations into a broader legal framework.
For instance, during the 14th National People’s Congress, Beijing enacted the Law on Foreign Relations of the People’s Republic of China to counter foreign trade restrictions and sanctions.
Being cognizant of these evolving legal mechanisms is instrumental in anticipating Beijing’s responses to future U.S. actions.
As the U.S.-China economic rivalry advances, both nations are edging closer to a potential decoupling of their economies, fueled by tit-for-tat responses leading to targeted non-tariff measures such as export controls.
This disentanglement would have significant ramifications in third markets worldwide, impacting all nations involved.
Despite the enormity of the challenges posed by this economic friction, potential avenues for resolution are narrowing, while the mechanisms for escalation are becoming increasingly sophisticated.
With economic security taking center stage in the foreign policies of both nations, the United States must navigate this complex landscape with strategic foresight.
A reactive stance could deepen a cycle of retaliation that jeopardizes global markets and undermines U.S. economic resilience.
By adopting a more nuanced evaluation of vulnerabilities, maintaining open lines of communication, and preparing for the legal and regulatory shifts emanating from Beijing, Washington can design a more balanced and effective export control strategy that protects national interests while reducing the likelihood of unnecessary economic fallout.
image source from：https://www.csis.org/analysis/hidden-risk-rising-us-prc-tensions-export-control-symbiosis
