China’s Stance on Fentanyl Cooperation Amid U.S. Tariff Threats
China is prepared to cooperate with the U.S. regarding illicit fentanyl dealings but warns that ongoing tariff debates could hinder this collaboration; increased U.S. tariffs spurred by fentanyl concerns have led to retaliatory measures from China. Recent economic forecasts anticipate continued growth for China despite the trade tensions.
China has expressed its willingness to collaborate with the United States on concerns related to illicit fentanyl trade. However, a representative from the Chinese Ministry of Foreign Affairs indicated that if this ongoing dialogue leads to increased U.S. tariffs on China, that would present a significant complication. The official asserted that the U.S. should “have said a big thank you” for China’s efforts to combat the fentanyl trade, as Washington has instead imposed multiple tariff increases this year.
Since taking office, President Donald Trump has raised tariffs on Chinese imports by 20%, attributing this action to China’s purported involvement in the U.S. fentanyl crisis, which has resulted in numerous overdose fatalities. While fentanyl precursors largely originate from China and Mexico, the White House did not respond to inquiries following these statements from China. Earlier this month, China released a white paper detailing its initiatives to limit the production and export of fentanyl precursors in recent years.
Under the Biden administration, fentanyl cooperation was noted as a rare avenue for U.S.-China diplomatic engagement. Previous discussions were held in Beijing, highlighting a shared interest in combating this issue. Concurrently, President Trump indicated that tariffs may also serve as leverage to compel ByteDance, the parent company of TikTok, to divest its U.S. operations.
During his first presidential term, Trump focused on tariffs as a mechanism to address the trade deficit with China. A “Phase One” trade agreement reached just prior to the Covid-19 pandemic mandated increased Chinese purchases of American goods. Recent U.S. trade data indicates that the deficit narrowed to $295.4 billion in 2024, down from $346.83 billion in 2016.
Despite these improvements, trade tensions have persisted following the commencement of the President’s second term. The effective U.S. tariff rate on Chinese imports is projected to rise to 33%, markedly higher than the approximately 13% rate before his presidency, according to insights from Nomura’s Chief China Economist Ting Lu. In retaliation, China has implemented targeted tariffs on U.S. energy and agricultural products, as well as export restrictions on critical minerals.
Furthermore, the Chinese Ministry of Commerce has categorized several U.S. companies, predominantly within the aerospace and defense sectors, to lists that limit their business scope in China. The foreign ministry representative characterized these countermeasures as “legitimate actions” designed to safeguard national interests.
According to Allianz, the recently imposed 20% tariffs could impact China’s GDP growth, reducing it by 0.6 percentage points this year and next. Nonetheless, the firm anticipates a growth rate of 4.6% in 2024 and 4.2% in 2026, under the premise that fiscal stimulus will alleviate the tariff repercussions. Senior economist Francoise Huang noted potential for negotiations, suggesting that retaliation may not be overly extensive.
In summary, China’s readiness to cooperate with the United States on fentanyl trade is overshadowed by ongoing tensions surrounding tariffs. The U.S. has increased tariffs based on concerns about China’s role in the fentanyl crisis, prompting countermeasures from Beijing. Despite these challenges, both nations recognize the importance of dialogue on this critical issue. Economic forecasts indicate potential growth for China, contingent upon effective mitigation strategies against tariff impacts.
Original Source: www.cnbc.com
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