China has not retaliated against US tariff increases on Chinese imports partly because of continued dialogue between the world’s two largest economies, the US Treasury’s top economic diplomat Jay Shambaugh said.

Shambaugh said the Chinese officials understand the tariffs are narrowly targeted to strategic sectors, including where the Biden administration is making investments to develop US production.

The increases, affecting some US$18 billion worth of imports, capped a two-year review of the punitive “Section 301” tariffs imposed by former US president Donald Trump that also kept those in place. The US directly imports very few vehicles from China and has high duties on Chinese-made steel products.

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