Chinese Firms Set to Seek Alternative Sources for Key U.S. Imports

By Zhao Xuan, Feng Yiming and Ding Yi

As Washington and Beijing continue to go toe-to-toe with tariffs, Chinese companies are expected to seek alternative sources for affected goods, such as soybeans, while accelerating efforts toward technological self-sufficiency, analysts said.

The State Council, China’s cabinet, on Wednesday announced an additional 50% retaliatory tariff on all U.S. imports, bringing the total levy to 84%. U.S. President Donald Trump then raised the overall tariff on Chinese goods to 125%, while announcing a 90-day pause for countries hit by his “reciprocal tariffs.”

Beijing had previously slapped a 34% duty to match the reciprocal tariff on Chinese goods announced by Trump last week.

As the tariff war escalates, China will see an increasing decline in U.S. imports, creating an opportunity for goods from other countries and pushing China to further accelerate its self-sufficiency in the high-tech sector, market analysts said.

A shift in agricultural imports

Agricultural products accounted for around 20% of the total value of China’s U.S. imports in 2024, customs data showed.

Given China’s reliance on U.S.-produced soybeans, wheat and corn, these higher tariffs are likely to lead to a dramatic decline in agricultural imports from the U.S., Lin Yidan, an agriculture industry analyst at Guotai Haitong Securities Co. Ltd., told Caixin.

The U.S. is China’s second-largest source of agricultural imports. China imported $27.6 billion worth of U.S.-made agricultural products last year, accounting for 12.7% of its total agricultural imports by value, according to data from the Ministry of Agriculture and Rural Affairs.

On March 10, China imposed 10% to 15% tariffs on some U.S. agricultural products including wheat, soybeans, cotton and seafood. It was retaliating against a 10% tariff hike by the U.S. on all goods from China on March 4.

China’s countermeasures have made American agricultural products more expensive and so less competitive among potential suppliers, according to analysts from Argus Media, a provider of energy and commodity price information.

The added 10%-15% tariffs on U.S. agricultural imports have made it economically unfeasible to continue sourcing from the U.S., especially since American suppliers were unwilling to share the cost burden, a Chinese grain trader said.

China is expected to import more soybeans from countries such as Brazil to reduce costs, according to a report by Guosen Securities Co. Ltd. China already buys around 71% of its soybean imports from Brazil, while the U.S. accounts for 21%.

In the long run, China is expected to increase its self-sufficiency in agricultural and seed production to mitigate the risks of a trade war, said Lin at Guotai Haitong.

Earlier this month, the Communist Party’s Central Committee and the State Council unveiled a scheme to boost the country’s agricultural production and seed cultivation capabilities as part of a broader strategy to become self-sufficient in grain production.

Homegrown chips 

China is also expected to accelerate its efforts to become self-sufficient in core tech industries like chipmaking.

China spent $11.8 billion on American-made integrated circuits last year and imported $4.5 billion of semiconductor manufacturing equipment and components from the U.S., according to a report by Dongxing Securities Co. Ltd.

With the cost of importing this technology set to increase, Chinese companies will seek alternative suppliers from Japan, South Korea and Europe, while domestic chipmakers are being pushed to enhance their production capacity, the report said.

This comes as Beijing has ramped up support for the semiconductor sector in recent years, identifying it as key to national security. At the same time, Washington has been trying to curb China’s access to advanced semiconductor technology, with efforts intensifying under the Biden administration.

Luo Guoping contributed to this story.

Contact reporter Ding Yi (yiding@caixin.com) and editors Jonathan Breen (jonathanbreen@caixin.com) and Kelsey Cheng (kelseycheng@caixin.com)

caixinglobal.com is the English-language online news portal of Chinese financial and business news media group Caixin. Global Neighbours is authorized to reprint this article.

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