The imposition of a 10% tariff on Chinese goods imported into the United States “seriously violates the WTO rules,” China’s Ministry of Commerce said in a statement Sunday, adding that China will “resolutely defend its rights.”
In this statement, China’s Ministry of Commerce expressed strong opposition to the tariffs, describing them as a setback to the trade relationship between the two nations. The ministry pledged to introduce “corresponding countermeasures,” although it did not provide specific details on what these would entail.
That response, at least so far, has been noticeably less concrete than the ones from Mexico and Canada, which were both quick to pledge swift retaliatory tariffs. The latest announcement raises a 10% tariff on Chinese products, rather than the 25% on all goods from Mexico and most from Canada—all are expected to go into effect Tuesday. Unlike China, where the latest tariffs top existing ones on a swath of goods, Canada and Mexico previously enjoyed nearly a duty-free relationship with the US.
China’s Threat of Countermeasures
China has reiterated its threat to take “necessary countermeasures to defend its legitimate rights and interests” following Trump’s decision to impose 10% tariffs on China for allegedly doing too little to stem the production of precursor chemicals for fentanyl.
The Foreign Ministry statement issued Sunday did not mention any specific retaliatory measures but said, “China calls on the United States to correct its wrongdoings, maintain the hard-won positive dynamics in the counternarcotics cooperation, and promote a steady, sound, and sustainable development of the China-U.S. relationship.”
China says the U.S. action violates World Trade Organization rules and has vowed to bring a case before the body that governs global commerce. The Ministry of Public Security on Sunday made nearly identical charges, and the Commerce Ministry also issued a closely worded statement.
The Blame Game: Accusations Fly
Trump accuses China of allowing the production of fentanyl, which is then made into tablets in Mexico and smuggled into and distributed throughout the U.S., which records some 70,000 overdose deaths from the drug annually.
China says the U.S. must hold itself to account instead of “threatening other countries with arbitrary tariff hikes,” the Foreign Ministry said. “The United States needs to view and solve its own fentanyl issue in an objective and rational way … (China is) one of the world’s toughest countries on counternarcotics, both in terms of policy and its implementation.”
Experts say China executes an unknown number of people each year for smuggling drugs, but domestic drug use is relatively low. The Ministry of Public Security statement said the U.S. has not reported any fentanyl precursor seizures originating in China since Beijing began to take legal action.
Possibility of a Trade Deal
The 10% tariffs are a far cry from the upwards of 60% tariffs that Trump suggested he could levy on Chinese goods while on the campaign trail. Trump has—at least in his rhetoric—largely linked these duties to the role of Chinese suppliers in the fentanyl trade, not the gaping trade imbalance between the US and China.
“Trump may rely on the upcoming results of trade investigations to impose or expand tariffs on specific countries, testing their tolerance and willingness to negotiate,” an analysis published Sunday on the website of Shanghai-based think tank Fudan Development Institute said.
The message from China’s top political echelon has been conciliatory. Chinese Vice-Premier Ding Xuexiang last month told elites gathered in Davos that Beijing wants to “promote balanced trade” with the world, while Xi called for a “new starting point” in US-China ties.
Beijing’s decision to complain to the WTO about the new tariffs underscores a key message from Chinese Communist Party propagandists: that China plays by global rules, while the US is the one who does not. Beijing has also defended its efforts to control exports of precursor chemicals for fentanyl and said the drug crisis is “America’s problem.”
Biden Administration’s Trade Strategy
The Biden administration largely kept those duties in place while focusing on its own so-called “small yard, high fence” approach to trade with China—placing targeted export controls on Chinese access to high tech that could have military applications.
That saw Beijing unleash its controls—limiting the export of certain critical minerals and related technologies that countries rely on to fabricate products from military goods to semiconductors. Beijing has already taken steps to insulate itself from some of the impacts of the tariffs, which Trump himself has admitted could bring “pain” for Americans—an admission that follows concerns from economists and members of Congress that Americans will bear the cost of the measures.
The US imported $401 billion worth of goods from China, with a trade deficit of over $270 billion in the first 11 months of last year, according to US government data. That placed China behind only Mexico as a top source for goods imported to the US.
Chinese state media on Sunday said the country’s exports to the US account for only 3% of their GDP and less than 15% of China’s total exports.
Xi Jinping’s Goals and Economic Challenges
China’s enormous trade deficit with the U.S., which reached nearly $1 trillion last year, has been a constant target of Trump’s complaints. Tariffs would make Chinese goods more expensive for U.S. consumers, who will ultimately have to pay a significant part of the cost of importing everything from toys to clothing.
China’s vital export market could be impacted if U.S. consumers decide to “buy American.” The Chinese domestic economy has failed to respond to a range of government-backed stimuli, while foreign infrastructure projects and other major government initiatives that add to the country’s already high public debt threaten more economic stagnation.
That is already starting to derail Chinese President Xi Jinping’s push to overtake the U.S. in key economic and political indicators, threatening his ultimate ambition to conquer the island republic of Taiwan and assert Chinese primacy in the Indo-Pacific region.
Stopping illegal immigration has also been one of Trump’s core political messages and was named in tariff actions against U.S. neighbors Mexico and Canada. Illegal arrivals from China are considered a fraction of such numbers, but Trump has put virtually every country on notice that he will hold them accountable for their nationals who enter the U.S. outside the law.
Ongoing Trade Dispute
Although the dispute could further strain China-US relations, Beijing remains aligned with the rules-based international trade system, as it prepares to challenge the tariffs at the WTO. However, the WTO’s dispute settlement system has been largely paralyzed since 2019, when the US blocked the appointment of judges to the WTO’s appellate body.
As tensions continue to rise, China and other countries targeted by US tariffs are preparing their responses. Canadian Prime Minister Justin Trudeau has announced plans to impose retaliatory tariffs on American goods, while Mexico’s President Claudia Sheinbaum has directed her government to formulate a counterplan.
