China is escalating its retaliation against the United States by broadening the trade conflict beyond goods and tariffs, targeting the American services sector and launching new non-tariff measures amid a deepening standoff with the Trump administration. The moves come as Washington imposes levies of up to 245% on Chinese goods and demands Beijing take the first step toward reopening trade talks.
While President Donald Trump has pressed ahead with multiple rounds of tariffs in recent weeks, China is shifting focus. It has announced tighter export controls on rare earth minerals, issued antitrust probes into U.S. firms such as Google and DuPont, and directed Chinese airlines to suspend purchases from Boeing. The directive adds to Boeing's woes as the company grapples with ongoing safety and quality-control issues.
"The unilateral tariff increases were entirely initiated by the United States," Chinese commerce ministry spokesperson He Yongqian said Thursday, accusing Washington of applying "extreme pressure, coercion and blackmail." China's commerce ministry maintained that negotiations can only proceed on the basis of "mutual respect and equality."
In its latest response, China suspended future deliveries of Boeing aircraft and moved to limit purchases of aviation equipment and parts from U.S. suppliers. Simultaneously, state media has urged Chinese businesses and consumers to reduce dependence on American technology, calling for domestic replacements.
"Beijing is clearly signaling to Washington that two can play in this retaliation game and that it has many levers to pull, all creating different levels of pain for U.S. companies," said Wendy Cutler, vice president at the Asia Society Policy Institute.
China has also expanded scrutiny over U.S. firms operating in its domestic market. Dozens of American companies, including Illumina and PVH Corp., have been placed on Beijing's "unreliable entities" list. In addition, reports suggest Beijing may investigate U.S. legal and consultancy firms for "monopoly benefits" stemming from their intellectual property holdings in China.
Services trade is increasingly in China's crosshairs. The U.S. has run a consistent surplus in services with China, reaching $32 billion last year, according to Nomura. Travel and education account for the bulk of that, with over 270,000 Chinese students studying in the U.S. in 2024, contributing to a U.S. services export total of $55 billion.
Beijing is now discouraging travel and study in the U.S., reducing film imports, and signaling possible restrictions on consulting and legal services. "These measures target high-visibility sectors - aviation, media, and education - that resonate politically in the U.S.," said Jing Qian, managing director at the Center for China Analysis. "Reputational effects - such as fewer Chinese students or more cautious Chinese employees - could ripple through academia and the tech talent ecosystem."
China has also issued arrest notices for three individuals it alleges conducted cyberattacks on its infrastructure on behalf of the U.S. National Security Agency. The publication of the notice in state media accompanied calls for Chinese users and companies to abandon American software.
Analysts expect further pressure on U.S. firms operating in China, including Apple, Tesla, and companies in the medical device and pharmaceutical sectors. "From the Chinese government's perspective, the U.S. companies' operations in China are the biggest remaining target for inflicting pain on the U.S. side," said Gabriel Wildau, managing director at Teneo.
While the White House said Tuesday that the "ball is in China's court," Beijing has shown no interest in resuming negotiations without significant concessions. "The person who tied the bell must be the one who unties it," said He, quoting a Chinese proverb to imply that the U.S. must roll back its tariffs to reinitiate dialogue.
