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BEIJING — China has expressed its readiness to enhance efforts to address concerns from the U.S. regarding the illegal fentanyl trade. However, a spokesperson from the Chinese Ministry of Foreign Affairs cautioned that the situation could change if the ongoing discussions about the drug lead to additional U.S. tariffs on China, the world’s second-largest economy.
The official suggested that the United States should express gratitude toward China’s initiatives aimed at controlling the fentanyl trade within its borders, arguing that the U.S. administration has not recognized these efforts. Instead, the U.S. has increased tariffs on Chinese goods twice this year, citing China’s alleged contribution to the fentanyl crisis affecting the United States.
Since President Trump’s inauguration in January, tariffs on Chinese imports have escalated by 20%, grounded in claims that China plays a significant role in the opioid epidemic in the U.S. The opioid crisis has resulted in numerous overdose fatalities annually in the United States, with the majority of fentanyl precursors sourced from China and Mexico.
As of yet, the White House has not issued a statement in response to inquiries about the matter.
Earlier this month, the Chinese government released a white paper detailing measures taken over recent years to limit the production and exportation of fentanyl precursors. When asked directly if China would halt its current restrictions on this trade, the official declined to provide a definitive answer.
During the Biden administration, both Washington and Beijing acknowledged that addressing the fentanyl issue was one of the few areas where collaboration was possible. Dedicated discussions took place in Beijing last year to further this cooperation.
Earlier in the year, former President Trump mentioned leveraging tariffs as a strategy to compel China to pressure ByteDance, the parent company of TikTok, to divest from the application amid ongoing concerns about data privacy and national security, coinciding with an upcoming deadline to maintain its operations in the U.S.
Trump had long positioned tariffs as a mechanism to tackle the U.S. trade deficit with China. Just prior to the COVID-19 pandemic, both nations had reached a “Phase One” trade deal requiring China to significantly increase its purchases of American goods. Recent data indicates a reduction in the trade deficit with China, narrowing to $295.4 billion in 2024 from $346.83 billion in 2016.
Trade tensions have lingered since the beginning of the current presidential term, with the effective U.S. tariff rate on Chinese goods projected to rise to 33%, compared to around 13% before Trump’s latest term commenced, as noted by Ting Lu, Chief China Economist at Nomura.
In retaliation to the U.S. tariffs, Beijing has implemented targeted duties on various energy and agricultural products and has imposed stricter export controls on vital minerals that the U.S. relies upon. Furthermore, China’s Ministry of Commerce has placed limitations on several U.S.-based companies, primarily in the aerospace and defense sectors, restricting their operational capabilities in China.
The Chinese Foreign Affairs official defended these countermeasures as “legitimate actions” aimed at safeguarding national interests.
Economists at Allianz predict that the additional 20% U.S. tariffs could lower China’s GDP growth by 0.6 percentage points this year and next. Despite this, they anticipate the Chinese economy will still grow by 4.6% in 2024 and 4.2% in 2026, largely due to expected stimulus measures designed to counteract the effects of the tariffs.
Francoise Huang, a senior economist focusing on Asia-Pacific and global trade at Allianz Trade, expressed in a recent interview that while retaliatory measures have been implemented, they are not excessively severe, suggesting there may still be opportunities for negotiations ahead.
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