Written by Joe Cash
BEIJING (Reuters) – China has strongly reacted to U.S. President-elect Donald Trump’s plan to impose additional tariffs on Chinese goods in response to fentanyl trafficking, accusing his upcoming administration of shifting the blame for America’s opioid crisis onto China.
Trump, set to take office on January 20, announced on Monday that he would enforce a 10% tariff on Chinese products to pressure Beijing into halting the flow of Chinese-made chemicals used in the production of the highly addictive drug.
During his campaign, Trump had previously threatened tariffs exceeding 60% on Chinese imports.
“China remains steadfast against unilateral tariff hikes,” stated He Yadong, a spokesperson for the commerce ministry, during a regular press briefing on Thursday. “Unilaterally imposing tariffs on trading partners will not solve America’s internal issues.”
He emphasized that the U.S. should adhere to World Trade Organization regulations and collaborate with China to foster stable economic and trade relationships.
Trump’s statements have initiated what analysts predict will be a challenging four-year trade dispute, potentially more severe than his first term, which witnessed tariffs ranging from 7.5% to 25% and disruptions in global supply chains.
Howard Lutnick, Trump’s nominee to lead the Commerce Department and supervise the Office of the U.S. Trade Representative, hinted in a podcast interview in October that “China is launching an assault on America” through fentanyl and hinted that Trump might impose tariffs as high as 200% on Chinese goods.
Chinese state media editorials this week cautioned that new tariffs could lead the world’s top two economies into a mutually detrimental trade war.
DEJA VU
There is a sense of deja vu on Thursday as Chinese state media commended certain U.S. companies for their “strong collaboration” – reminiscent of how tensions with the U.S. were portrayed by the Chinese media in the previous trade conflict.
Previously, U.S. corporate executives and foreign investors closely monitored Chinese state media for indications of which American firms might receive favoritism or penalties as tensions escalated.
The state-owned Global Times mentioned Apple (NASDAQ:), Tesla (NASDAQ:), Starbucks (NASDAQ:), and HP (NYSE:) late on Wednesday.
“U.S. policymakers should acknowledge and respect the evident eagerness of American businesses for economic and trade partnerships by creating suitable policy environments for enterprises,” the Global Times stated.
China Daily also highlighted that Morgan Stanley (NYSE:) expanded its China operations in March after receiving regulatory approval, citing this as proof of foreign financial firms’ enthusiasm to invest in China.
“Both sides lacked direct policy communication, leading businesses to interpret signals from traditional and social media,” commented an American executive based in Beijing regarding the initial trade war.
The executive, speaking anonymously, noted that during Trump’s first term, China threatened to ban U.S. companies from engaging in trade activities with China, including imports, exports, and investments, through the creation of the “Unreliable Entity List.”
At the time, Global Times mentioned that the list could target U.S. companies like Apple, Cisco Systems (NASDAQ:), and Qualcomm (NASDAQ:). However, China never followed through with the threat, and the list has only included U.S. companies involved in arms sales to Taiwan.
Bo Zhengyuan, a partner at consultancy Plenum in Shanghai, suggested that Beijing might refrain from swiftly utilizing tools like the Unreliable Entity List following any official tariff announcement once Trump assumes office, considering China’s fragile economic state.
“There was collateral damage last time, and there will be collateral damage this time,” he added.
However, Beijing could potentially retaliate later if it perceives that U.S. policies are detrimental to China’s commercial interests.