Both sides will lose if the U.S. imposes new tariffs against China, Beijing has warned, after president-elect Donald Trump threatened to enact sweeping new measures on day one of his second term.
Writing on social media Monday, Mr. Trump said he would introduce new tariffs on all products coming into the U.S. from China, Canada and Mexico, blaming the three countries for allowing migrants and drugs onto American soil.
“This tariff will remain in effect until such time as drugs, in particular fentanyl, and all illegal aliens stop this invasion of our country!” he wrote.
Responding to Mr. Trump, Chinese embassy spokesperson Liu Pengyu said economic and trade co-operation between the two countries was “mutually beneficial in nature.”
“No one will win a trade war or a tariff war,” he said.
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Speaking Monday before Mr. Trump’s posts, Chinese Premier Li Qiang warned against “protectionist moves,” which he said were “harming global industrial and supply chains, further driving up enterprise costs, reducing economic efficiency and hindering common development.”
Since Mr. Trump was elected on promises to enact 60-per-cent tariffs against Chinese goods, Beijing has been bracing for the impact on its already struggling economy.
Nick Marro, principal economist for Asia at the Economist Intelligence Unit, said Mr. Trump’s pronouncement this week “could be the first salvo in the reignition of U.S.-China trade tensions.”
He noted that despite some Chinese commentators hoping Mr. Trump would be amenable to negotiating some kind of sweeping economic agreement – of the type he pursued during his first term – “right now it’s not entirely clear what type of trade deal the U.S. would even be interested in striking with China.”
Mr. Marro said that during the previous Trump term, there were clear demands from the U.S. on China, including levelling the playing field for U.S. businesses in the Chinese market, reducing intellectual property theft and tech transfers, and limiting protectionist measures that distorted global markets.
Despite pledges from Beijing to act on such issues, including in the first phase of the U.S.-China trade deal negotiated by Mr. Trump’s team, not much actually changed on the ground, Mr. Marro said. “As a result, I think Beijing’s either unwillingness or inability to deliver on these proposed reforms has caused the mood in D.C. to sour.”
“The appetite for deal-making just doesn’t really exist in the 2020s as it did in the 2010s,” he said. “What that means is that when we zoom out to the broader context of U.S.-China trade relations, there’s not much of an off-ramp any more. There’s no obvious solution that Beijing can provide to de-escalate these tensions.”
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This may be particularly true when it comes to the issue of drugs, where co-operation with China has improved dramatically in recent years, but without necessarily reducing the flow of chemicals used to make fentanyl from Chinese labs to North America.
“I have had many talks with China about the massive amounts of drugs, in particular fentanyl, being sent into the United States – but to no avail,” Mr. Trump posted to social media on Monday. “Representatives of China told me that they would institute their maximum penalty, that of death, for any drug dealers caught doing this, but, unfortunately, they never followed through, and drugs are pouring into our country, mostly through Mexico, at levels never seen before.”
Until Beijing acts on this issue, he added, “we will be charging China an additional 10-per-cent tariff, above any additional tariffs, on all of their many products coming into the United States of America.”
China has the largest chemical industry in the world, something illicit actors have been able to take advantage of amid growing demand for synthetic drugs, particularly opioids, in North America. Even as Beijing has responded to Western pressure by banning all fentanyl-related precursors – chemicals used to make the street drug – labs have been able to shift to producing alternative chemicals and pre-precursors (and even pre-pre-precursors).
This problem is not isolated to China, with labs in India and elsewhere also exporting large amounts of fentanyl-related chemicals. Final production often takes place in North America, including in Canada: last month, the RCMP busted a “superlab” operating in British Columbia linked to international organized crime groups.
For years, Western countries have worked with China to try to limit precursor production and exports, and during a meeting with Chinese leader Xi Jinping last week, incumbent U.S. President Joe Biden praised China’s “scheduling of 55 dangerous synthetic drugs and precursor chemicals, closure of online platforms and companies that supply precursor chemicals, and arrests connected to the illicit chemical industry.”
With the opioid epidemic largely confined to North America and driven originally by U.S. production and over-prescription of painkillers, Chinese officials often react indignantly to being blamed for this issue. Their frustration is shared by many involved in negotiations with Beijing, who see criticism of China’s efforts as counterproductive, ignoring the tangible steps taken and risking ongoing law enforcement co-operation.
For his part, Mr. Liu said there was “regular communication” between the U.S. and China on counternarcotics, adding the idea that Beijing is “knowingly allowing fentanyl precursors to flow into the United States runs completely counter to facts and reality.”
Editor’s note: (Nov. 26, 2024): A previous version of this article incorrectly described Liu Pengyu as China's ambassador to the U.S. He is a spokesperson for the Chinese embassy in the U.S. This version has been updated.