China Rejects U.S. Accusations of Overcapacity and Forced-Labor Tariffs Amid Trade Truce

The United States announced additional tariffs of 10% to 12.5% on goods from 60 trading partners, assigning a 12.5% rate to Chinese imports and citing alleged forced-labour practices and excess industrial capacity. China’s Ministry of Commerce responded that the measures are “unjustified” and constitute protectionist unilateralism, asserting that Washington has no authority to label Chinese production as excess capacity and impose punitive duties.

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The U.S. investigation of 16 economies for excess manufacturing capacity, including China, is expected to inform further tariff actions. China’s trade surplus reached a record-high of nearly $1.2 trillion last year, reflecting strong export growth despite slowing domestic demand. Premier Li Qiang framed the situation at the World Economic Forum’s “Summer Davos” in Dalian as a “China Opportunity 2.0,” rejecting the notion of a “China shock 2.0.” Earlier this month, the European Union introduced protective measures for its steel sector and limited e-commerce parcel imports from China.

UsNews and World ReportChina hits back at criticism over excess industrial capacity as more US tariffs loom

• Trade surplus: ~$1.2 trillion (record level).

Beijing Says US Agreed to Cap New China Tariffs at 20%

• U.S. tariff rates: 10%–12.5% on 60 economies; China’s rate: 12.5%.

Beijing Says US Agreed to Cap New China Tariffs at 20%

• Replacement tariff ceiling: The United States pledged a 20% cap on replacement tariffs for Chinese goods, leaving 7.5 percentage points of potential increase.

Bloomberg

• Previous global duty: 10% duty expired on July 24.

Beijing Says US Agreed to Cap New China Tariffs at 20%

• Historical peak: U.S. duties on Chinese imports previously surged to 145% before a one-year truce was negotiated.

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• ** rejecting the “China shock 2.0” narrative as factually unsupported.

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• Lin Weilong, director of the Commerce Ministry’s policy research office, emphasized that the United States lacks the right to unilaterally define and label excess capacity.

China hits back at criticism over excess industrial capacity as more US tariffs loom

• A Commerce Ministry spokesperson reiterated that China opposes forced-labour tariffs, pointing out that the United States has not ratified the 1930 Forced Labour Convention and has long manipulated the issue. The spokesperson noted that, during bilateral trade talks, Washington committed that replacement tariffs would not exceed 20%.

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• The ministry also stated that China will continue to monitor U.S.

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Alfredo Montufar-Helu, a China specialist at Ankura, warned that China’s position is likely to “fall on deaf ears.” He argued that deteriorating economic conditions in Western markets make it politically untenable for policymakers to ignore the surge of Chinese imports, especially in high-value-added sectors where Western firms previously held dominance.

UsNews and World ReportChina hits back at criticism over excess industrial capacity as more US tariffs loom

All sources agree that the current U.S. tariff on Chinese goods is 12.5% and that the United States pledged a 20% ceiling. However, descriptions of the legal basis differ: some reports cite a Section 301 investigation, while others reference replacement of duties previously imposed under the International Emergency Economic Powers Act (IEEPA) and Section 122 surcharges. The precise statutory framework for the new tariffs remains unclear.

Global Times

• A possible visit by President Xi Jinping to the United States is being prepared for September, which could influence the trajectory of the dispute.

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• The one-year trade truce, established at the Busan summit, is set to expire in November unless the parties agree to extend it, leaving the future level of tariffs uncertain.

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