By Alan Rappeport
Earlier this week, President Donald Trump announced his intention to implement a 10% tariff on imports from China beginning on Feb. 1, a move that is likely to intensify trade disputes between the globe’s largest economies.
During a statement at the White House, Trump indicated that the tariffs were a reaction to China’s involvement in America’s fentanyl crisis. He claimed that China was sending fentanyl to Canada and Mexico, which would then be smuggled into the United States.
This tariff warning follows Trump’s declaration on Monday to establish a 25% levy on imports from Canada and Mexico as retribution for their failure to stop the flow of fentanyl and illegal migrants into the U.S.
“We’re discussing a 10% tariff on Chinese goods due to their shipment of fentanyl to Mexico and Canada,” Trump stated.
These tariffs would be in addition to the duties Trump previously enacted on over $300 billion of Chinese imports during his first presidency. These tariffs were also maintained by President Joe Biden, who added further taxes on Chinese electric vehicles, solar panels, semiconductors, and cutting-edge batteries.
Trump’s commitment to impose tariffs on China, Canada, and Mexico could lead to retaliatory measures affecting U.S. industries. Economists have cautioned that a worldwide trade conflict might spark inflationary pressures and hinder U.S. economic progress.
On Monday, Trump signed an executive order mandating various agencies to analyze a wide range of trade matters with a view toward potential future tariffs, yet he refrained from enacting any immediate new levies that he had previously signaled.
Instead, he instructed U.S. authorities to investigate the patterns of migrants and drug flows from Canada, China, and Mexico into the United States, along with the adherence of these three nations and others to their current trade agreements with the U.S.
During his tenure, Trump negotiated a new trade agreement with Canada and Mexico: the United States-Mexico-Canada Agreement, or USMCA. He also reached a limited trade arrangement with China aimed at benefitting American agriculture.
He has since expressed his desire to renegotiate both agreements in his second term.
Last week, Trump had a conversation with Xi Jinping, the president of China, where they discussed trade, fentanyl, and collaborative opportunities between the two largest economies in the world.
Following Trump’s initial tariff measures on China during his first term, he later endorsed a comprehensive economic agreement in 2020.
The relationship between the countries deteriorated during the pandemic, which Trump attributed to China, as Beijing failed to uphold several commitments in the deal, including purchasing American agricultural products.
During his confirmation hearing last week, Scott Bessent, Trump’s nominee for Treasury secretary, stated that he intended to urge his Chinese counterparts to start acquiring U.S. farm products as promised by their government.
The Treasury nominee also expressed that he would encourage his Chinese counterparts to procure additional items to compensate for what was expected to be purchased over the last four years.
