'Reserves right to act': China warns of countermeasures as US weighs 7.5% tariff on 'excess capacity'

China has warned it could take countermeasures if the US imposes new tariffs following an investigation into alleged industrial overcapacity, underscoring ongoing trade tensions between the two countries despite their recent trade truce.

According to a Bloomberg report, Chinese Commerce Ministry spokesman Huang Ling reiterated Beijing’s disapproval of the US probe into China and other economies, saying Washington launched the investigation under “the pretext of overcapacity”.

“We will continue to closely monitor and comprehensively evaluate the follow-up actions of the US and reserve the right to take any necessary measures,” Huang said at a regular press briefing on Thursday.

The US is considering tariffs on China

The warning from China came after a Bloomberg report mentioned that the US was considering a 7.5% tariff on Chinese goods following an investigation into alleged overcapacity.

The move would be US President Donald Trump’s next move to revive his protectionist trade policies after the US Supreme Court overturned his earlier import tariffs.

The proposed tax would also bring U.S. tariffs on Chinese goods to levels Beijing says the two sides agreed to during earlier trade talks.

If the Trump administration followed through on the move, it would restore Trump’s second-term China stance to about 20%.

China urges US to restore ties

China’s warning comes despite broader efforts by Beijing and Washington to preserve the trade truce.

During a meeting with US Ambassador David Perdue on Wednesday, Chinese Foreign Minister Wang Yi called on the US to put bilateral relations back on the “right track”.

Wang accused Washington of imposing a series of “negative measures for baseless reasons”, according to a statement issued by China.

The Trump administration in March launched investigations into more than a dozen major trading partners under Section 301 of the Trade Act of 1974 over overcapacity concerns. It was one of two probes the president’s team used to replace his earlier tariffs with more durable ones.

Trump-Xi will meet in September

The Trump administration imposed a 12.5% tariff on Chinese goods in early July, citing “inadequate efforts to address forced labor practices.” Beijing criticized the move but did not retaliate. Instead, he said Washington had agreed to limit any additional tariffs on Chinese exports to 20%.

Trump will meet with Chinese President Xi Jinping in Washington on September 24, and the administration hopes to release the results of an investigation into excess capacity before then.