Trump on Saturday ordered 25% tariffs on Canadian and Mexican imports and 10% on goods from People’s Republic of China (PRC), saying Beijing needed to stanch the flow of fentanyl, a deadly opioid, into the United States.
China’s toned-down response marked a contrast with the direct retaliation and heated language from Canada, a long-time US ally, and Mexico, the top destination for US exports.
PRC commerce ministry said in a statement that Trump’s move “seriously violates” international trade rules, urging the US to “engage in frank dialogue and strengthen cooperation”.
Filing a lawsuit with the WTO could allow Beijing a win in messaging by standing up for the rules-based trading system long advocated by US administrations of both parties. Beijing has taken the same step in a challenge to tariffs of up to 45% on Chinese-made electric vehicles by the European Union.
At the same time, a WTO appeal poses no immediate cost or threat to Washington.
The WTO’s dispute settlement system has been effectively shut down since 2019 when Trump blocked appointments of judges to handle appeals. Since President Barrack Obama, the US has charged that the WTO appeals body had overstepped its authority.
‘America’s Problem’
For weeks Chinese foreign ministry spokesperson Mao Ning has said Beijing believes there is no winner in a trade war.
Chinese officials have also been encouraged by signs Trump could be seeking a more nuanced relationship with PRC since a conversation he had with Chinese leader Xi Jinping last month.
Both Republicans and Democrats have come to view China as the biggest foreign policy and economic challenge to the United States.
China’s massive trade surplus – almost $1 trillion last year – is a vulnerability for Beijing. China’s exports in key industries, including autos, have been growing faster in volume than value, suggesting manufacturers are discounting to try to win overseas sales when demand at home has been sputtering.
For that reason, analysts have expected China to try to strike a deal early with Trump to soften the blow from trade action by the US.
China has also been preparing for the long-expected Trump move on tariffs for months by deepening ties with allies, pushing for some self-reliance in key areas of technology and setting aside funds to prop up a vulnerable economy.
PRC economy, the world’s second-largest, hit its official growth target of 5% last year, even as many complained of declining job prospects and worsening living standards.
China’s sharpest pushback on Sunday was over fentanyl, an area where the Biden administration had also been urging Beijing to crack down on shipments of the China-made precursor chemicals needed to manufacture the drug.
“Fentanyl is America’s problem,” China’s foreign ministry said. “The Chinese side has carried out extensive anti-narcotics cooperation with the United States and achieved remarkable results.”
