The Chinese Ministry of Commerce (MOFCOM) expressed strong opposition to the U.S. imposing an extra 10% tariff on imports from China starting on March 4 and vowed to take necessary countermeasures to protect the legitimate rights and interests of Chinese companies. U.S. President Donald Trump announced that 25% tariffs on Canadian and Mexican goods will also take effect on March 4, while raising the additional tariff on imports from China from 10% to 20%, citing the so-called fentanyl issue as a pretext. MOFCOM said that unilateral tariffs violate World Trade Organization (WTO) rules and undermine the multilateral trading system.
A Ministry Spokesperson said that China is one of the countries that has the strictest drug control policies and highest levels of enforcement globally, and China has actively launched international drug control cooperation, including with the U.S. The Trump Administration holds China responsible for the influx to the U.S. of precursor chemicals to produce fentanyl. The U.S. has repeatedly ignored objective facts, previously imposed an additional 10% tariff on China using a similar pretext and is now threatening to impose more tariffs, the Spokesperson said.
Washington levied an additional 10% tariff on all Chinese imports in February. In response, China raised tariffs on U.S. coal and liquefied natural gas, agricultural machinery such as farm equipment, large-displacement cars and pickup trucks. The Ministry of Commerce said that shifting blame onto other countries will not address U.S.’ domestic issues. Instead, it will place a greater burden on U.S. businesses and consumers while disrupting the stability of global industrial supply chains. “We urge the U.S. to avoid repeating the same mistake and return to the right path of resolving differences through equal dialogue. If the U.S. persists in implementing the tariffs, China will take all necessary countermeasures to protect its interests,” the Spokesperson added.
Sun Xuegong, Director of the Department of Policy Study and Consultation at the Chinese Academy of Macro-economic Research, part of the National Development and Reform Commission (NDRC), said this U.S. tariff policy is a lose-lose scenario. “China suffers from that, and the U.S. suffers from that, and the whole world also suffers from that,” said Sun, adding that economic policy should be based on facts, not emotions. Tiffany Smith, Vice President for Global Trade Policy at the National Foreign Trade Council in Washington, told China Daily that “adding new and expanded tariffs will harm working families.”
Sharing similar views, Mary Lovely, Professor Emeritus of Economics at Syracuse University and Senior Fellow of the Peterson Institute for International Economics in Washington, said that tariffs will “take a larger share of income” from low-earning households in the U.S. Lovely said that politicians often tout tariffs as positive as they “cling to the belief that it creates jobs in the U.S.”. Xu Hongcai, Deputy Director of the Economic Policy Commission under the Beijing-based China Association of Policy Science, said China needs to engage in dialogue with the U.S. to resolve trade issues, and diversify and expand into international markets, focusing on cooperation with partners also hit by tariffs like the European Union, Japan, South Korea, Canada and Mexico. “It is also practical for China to further strengthen business ties with economies participating in the Belt and Road Initiative,” said Xu, as reported by the China Daily.
“Barring a last-minute reversal – always possible with Trump – the gloves are now off and the most significant global trade war in almost 100 years could be under way,” former U.S. Trade Negotiator Stephen Olson said in an emailed commentary to the South China Morning Post. “The initial 10% tariff on China was, for the most part, manageable. But the additional 10% will be far more problematic.” Economists around Asia projected the combined tariffs will shave 0.4 to 0.8 percentages points off China’s gross domestic product (GDP) for 2025, while squeezing the profits of its exporters in the American market, as goods from other sources will be priced more competitively with lower tariff burdens. The March launch date for the tariffs “surprised” Zhang Zhiwei, President and Chief Economist at Pinpoint Asset Management in Hong Kong, as he had expected them to be imposed in April. He called the hike “certainly negative for China’s exports”.
