Chairman Rabbit lays out China's six next countermeasures against U.S. "trade war"

The well-connected opinion leader says, in his post informed by "sources," Beijing could suspend fentanyl cooperation and target U.S. agricultural, poultry, services, film, and IP exports.

Ren Yi, better known by his Chinese alias tù zhǔxí (Chairman Rabbit), has just published the following post on his influential WeChat blog. In it, he says he is sharing his judgment based on communications with unidentified “sources.”

Bloomberg and The Economist have used the term “well-connected” to describe the Harvard-educated former research assistant to Ezra Vogel. So, I guess we should pay due attention to the piece.

Below is a translation.

反制美国贸易战，中国还有以下大招

Countermeasures to the U.S. Trade War: China’s Remaining Big Moves

兔主席/tuzhuxi 20250408

Donald Trump has entered a state of frenzy. After China proposed countermeasures, he threatened to impose a further 50% tariff on China. If this happens, it would effectively raise the actual tariff on China to over 100%. His recent series of reckless actions have been widely criticized by American domestic industries, markets, and professionals. From multinational corporations to small and medium-sized enterprises, losses are mounting; alliances and partnerships are being damaged; the global economic order is being disrupted; the U.S. could enter a recession; the return of manufacturing to the U.S. (and job creation) is fundamentally out of reach; and ultimately, the burden falls on American consumers. Bill Ackman, a financier ally of Trump, recently said that Trump’s actions are akin to launching an “an economic nuclear winter'” on the world. The President is losing the trust of global business leaders. These developments were not the reason they supported Trump in the first place.

Indeed, as pointed out by U.S. industries and professionals, tariffs are not a normal economic and trade activity nor a diplomatic tool, but a form of warfare. Trump’s actions, in essence, amount to declaring war on China and the world. Since the trade war began in Trump’s first term, China has exercised great restraint and avoided large-scale countermeasures. It’s not that China has refrained from retaliation, but rather that it has taken the big picture into account and waited for the right time. When the time comes for China to retaliate, it will do so without hesitation and will persist to the end.

After the U.S. imposes the additional 50% tariff on China, China can still implement effective countermeasures. These do not require a broad increase in tariffs on American goods, but instead, China can continue to target specific areas. Based on communication with sources, it is this author’s judgment that the likely areas for countermeasures are as follows:

1. Suspend cooperation on fentanyl

   When Trump imposed additional tariffs during his second term, he claimed it was due to the fentanyl issue and imposed a 20% tariff on China. The fentanyl problem is essentially a domestic issue in the U.S. The largest consumers are Americans, and the production site is Mexico; China is merely one of the raw material suppliers and should not be held accountable for the outcome. In reality, China has done much work on the fentanyl and drug control issue, but the Trump administration has completely ignored China’s efforts, refused China’s goodwill, and instead continued to make baseless accusations, shifting its own problems onto China. Now, Trump has again threatened to impose tariffs, eliminating the basis for further cooperation on fentanyl. China can suspend cooperation.

2. Further restrict U.S. exports of soybeans, sorghum, and other products to China

   Among the goods that the U.S. exports to China, agricultural products are a major category. Using tariffs and other measures to limit the export of American agricultural products to China has been a core strategy for China’s precise countermeasures. Agricultural products primarily come from the “red states” in the U.S., which support the Republican Party, and farmers/farm owners are an important part of Trump’s MAGA base. Trump faces significant political pressure domestically. Further retaliation against these products is a highly effective and targeted measure.

3. Restrict U.S. poultry exports to China

   For some time now, the U.S. has been facing a “bird flu” crisis, leading to rising prices for chicken and eggs. Industry professionals have long called for restricting U.S. poultry exports to China, both as a countermeasure and for food safety considerations.

4. Impose countermeasures in the services trade

   One fact that the Trump administration has overlooked is that China exports a large number of manufacturing products to the U.S. but also imports a significant amount of services from the U.S. Within the global trade framework, this is where the U.S. shows its comparative advantage. In 2024, China’s service exports to the U.S. were $64.27 billion, while U.S. service exports to China amounted to $91.55 billion, with a surplus of $27.27 billion for the U.S. (In fact, many of the products and services purchased by Chinese residents and businesses contain a service trade component, although they are not always fully accounted for in statistics). For years, the U.S. has outsourced manufacturing and focused its economic advantage on services such as design, branding, consulting, and finance, which is the result of global trade and a choice of industry. To retaliate against the U.S. for its trade war on goods, China can take measures in the services trade, such as restricting U.S. companies from participating in Chinese government procurement or limiting cooperation between Chinese companies and U.S. law firms and consultancy companies, among others. (In the future, such consulting firms could become targets for countermeasures, extending beyond law to finance). It is also important to note that China has always practiced “one-way openness” to the U.S. — in today’s political environment in the U.S., it is inconceivable that U.S. government agencies would procure services from Chinese companies. The U.S. federal and local governments have long been pushing legislation or administrative measures to prohibit the procurement of services from Chinese companies.

5. Reduce or ban U.S. film exports to China

   In recent years, the film market has undergone profound changes, thanks to the rise of China’s domestic film industry (in terms of production capabilities, content, cultural depth, etc.), the development and maturity of public tastes, and significant development in China’s film and television industry (such as “Ne Zha 2”). Meanwhile, Hollywood films have been in decline, with the recent “Snow White” suffering a major failure in the U.S., partly due to a lack of innovation in content and excessive ideological focus, making it unpopular on both sides of the American political spectrum. In the context of the China-U.S. trade war, China has various reasons to further restrict U.S. film imports.

6. Investigate U.S. companies’ intellectual property (IP) gains in China

   Contrary to the U.S. claims that China “steals” American intellectual property, China owns a vast amount of independent intellectual property. Ford CEO Jim Farley recently said, “They have IP that the rest of the world has not developed,” praising China’s technological advancements in electric vehicles. In contrast, the U.S. holds significant intellectual property interests in China, which are not only legally protected but also constitute monopolies, earning excess profits. China has always practiced “one-way openness” and has never implemented measures like those in Europe. Relevant departments can investigate this situation.

The trade war is not simply an economic friction but “a war without smoke.” This must be understood from that perspective. In the areas mentioned above, China has either always supported and cooperated with the U.S., or the U.S. has significant vested interests in China. Since the 2018 trade war, China has shown great restraint. “If others do not provoke me, I will not provoke them.” Even when China has taken measures, they would have been forced and retaliatory. We do not need to view this as a “permanent and long-term” situation. China is the maintainer of the global trading system. Decoupling is absolutely not China’s goal, but it is a necessary response at this stage. (Enditem)