China has warned Washington that no-one will win a trade war as Donald Trump threatens to impose an additional 10% tariff on goods heading to the United States.
This is not the 60% tariffs Trump had pledged to slap on Chinese goods during his campaign, so some businesses who export phones, handbags and furniture who’ve already been hit hard by the first trade war might be breathing a sigh of relief.
Others will fear this is just Trump’s opening shot and worry more tariffs are on the way.
Chinese state media described the threat as “irresponsible”, while the foreign ministry in Beijing claimed China had taken significant steps to stop the illegal flow of drugs, including fentanyl, into the US.
“China is one of the countries with the strictest and most thorough drug policies in the world,” says a foreign ministry spokesperson. “Fentanyl is primarily a problem for the United States.”
But Beijing was expecting this. It had time to prepare for a second Trump presidency and China has learned lessons from his first stint in the White House.
Much of the country’s agricultural imports now come from Brazil, Argentina and Russia and it has started exporting more products to non-US allied countries.
The last thing Beijing needs is another trade war as it battles slowing economic growth, a property crisis and high youth unemployment.
For now, these tariffs are just a threat. As well as tougher action on fentanyl, Trump may hope to convince President Xi to stop heavily subsidising China’s manufacturing industries which he sees as unfair competition.
But this tactic hasn’t work in the past, and Beijing is likely preparing its own robust counter-measures.
Liu Pengyu, who is a spokesman at the Chinese embassy in Washington, said something that those of us who follow global trade closely have heard many times before: “China believes that China-Us economic and trade cooperation is mutually beneficial in nature”.
However, cooperation has been difficult to come across in recent years. The majority of what the two sides sell each other is subject to tariffs – 66.4% of US imports from China and 58.3% of Chinese imports from the US.
That’s because President Joe Biden has kept in place all the trade restrictions that Donald Trump imposed, and added more of his own.
When it comes to the issues of Chinese-made drugs entering the US, Liu said: “Carrying out counternarcotics cooperation is one of the important common understandings reached between President Xi and President Biden during their meeting in San Francisco in 2023”.
It was an important meeting because it was only the second time they met face-to-face during Biden’s then nearly three years in office.Liu went on to say: “The Chinese side has notified the US side of the progress made in US-related law enforcement operations against narcotics. China has responded to US request for verifying clues on certain cases and taken action. All these prove that the idea of China knowingly allowing fentanyl precursors to flow into the United States runs completely counter to facts and reality.”