The Chinese government has said it would retaliate against the U.S. over the Trump administration’s decision on Thursday to impose hefty tariffs on Chinese imports, and the coal industry could be a prime target.
U.S. Commerce Secretary Wilbur Ross said during congressional testimony on Thursday that if China were to retaliate, they would likely respond in a way they see as “most politically hurtful” to the U.S.
One of President Donald Trump’s biggest campaign promises was to revive the U.S. coal industry. Throughout recent years, China has curtailed capacity in its coal sector as it seeks to move toward greener alternatives, like natural gas. Last year, Beijing canceled plans to build more than 100 coal plants, in addition to 30 in the year prior.
“Coal exports in the U.S. are surging in part because China has been shutting down its less efficient coal mines,” Marc Scribner, senior fellow at the Competitive Enterprise Institute, told FOX Business. “[Retaliating] against U.S. coal exports … may be a politically savvy move for the Chinese.”
If Beijing were to slap U.S. coal exports with a tariff, it would have a notably negative impact on the struggling U.S. industry, which sees a lot of demand in Asia, Scribner noted. China would also be able to strengthen its position in the sector, and would potentially turn instead to Canada and Australia for cheaper coal.
During the first seven months of 2017, the U.S. exported 4 million tons of coal to China, according to the EIA, representing a material increase over the two full years prior.
Other industries that could be targeted by China for retaliatory duties include airplane manufacturers and the agricultural sector.
During a press conference at the White House on Thursday, Ross said he didn’t believe the tariffs would escalate into a tit-for-tat trade dispute.
“We will end up negotiating these things rather than fighting over them, in my view,” he said.
The administration on Thursday announced tariffs on 1,300 Chinese goods, valued at $50 billion, to remedy damages incurred from unfair intellectual property practices in Beijing.
Trump maintained his commitment to negotiating fair trading deals, railing against the deficit with China, which he called “the largest deficit of any country in the history of our world.” He also said the value of the tariffs could extend as high as $60 billion.