China's Commerce Ministry Says It Reserves the Right to Take Measures in Response to US Overcapacity Tariffs

China's Commerce Ministry responded on Thursday to the US overcapacity tariff measures, with a spokesperson stating that China "will continue to closely monitor and comprehensively assess the follow-up measures taken by the US," while emphasizing that it "reserves the right to take all necessary measures." This statement continues China's previous cautious yet firm stance in trade frictions.

**Tariff Headroom and Time Window**

According to Bloomberg, citing sources familiar with the matter, the US is preparing to impose an additional 7.5% tariff on Chinese goods on the grounds of "overcapacity," bringing the cumulative tariff rate to approximately 20%. The current alternative tariff rate stands at 12.5%, leaving exactly 7.5 percentage points of headroom before reaching the 20% cap pledged by the US. If the new measures take effect, they would technically fill the cap while maintaining the framework of the bilateral trade truce agreement. Sources also cautioned that the US has yet to finalize the tariff rate and is still discussing plans to suspend implementation of certain tariff rates.

**Key Deadlines Approaching**

US-China trade relations are facing two key deadlines in the near term. The September 24 summit in Washington is the most immediate pressure point, with the timing of the overcapacity investigation report's release potentially coinciding with the meeting and determining the direction of negotiations. The November 10 expiration of the trade truce agreement represents a larger structural deadline—if no consensus is reached on an extension, the current effective tariff cap of 12.5% would be lifted, opening space for a larger-scale escalation. According to market analysis, this risk has not yet been fully priced in.

**China's Position and Legal Basis**

China has previously articulated its position on multiple occasions, arguing that launching a Section 301 investigation on the grounds of "overcapacity" is a typical act of unilateralism that severely undermines the international economic and trade order. A WTO expert panel has already ruled that tariff measures taken under Section 301 investigations violate WTO rules. The Ministry of Commerce released the same signal in its statement on July 27, and Thursday's remarks serve as another warning in response to the US's subsequent actions, indicating that while China reserves its right to countermeasures, it still leaves room for dialogue and consultation.