By Joe Cash
BEIJING (Reuters) -China attacked U.S. President-elect Donald Trump’s pledge to impose additional tariffs on Chinese goods over fentanyl flows, saying his new administration is shifting blame for the U.S. opioid crisis to China.
Trump, who takes office on Jan. 20, said Monday he would impose a 10% tariff on Chinese goods to ensure Beijing does more to stem the trade of Chinese-made chemicals used in the highly addictive narcotic.
He had threatened tariffs of more than 60% on Chinese goods during his campaign.
“China’s position against unilateral tariff increases is consistent,” He Yadong, a spokesperson for the Ministry of Commerce, told a regular news briefing on Thursday. “Imposing arbitrary tariffs on trading partners will not solve America’s own problems.”
He added that the US must abide by World Trade Organization rules and work with China to promote stable economic and trade relations.
Trump’s comments kicked off what analysts expect will be a four-year trade war, potentially far worse than his first term, which saw tariffs ranging from 7.5% to 25% and uprooting global supply chains.
Howard Lutnick, Trump’s pick to lead the Commerce Department and oversee the office of the U.S. Trade Representative, said in a podcast interview in October that “China is attacking America” with fentanyl and suggested Trump could impose tariffs up to 200% on China.
Editorials in Chinese state media this week warned that new tariffs could drag the world’s two largest economies into a mutually destructive tariff war.
DEJA VU
There was already an eerie sense of deja vu on Thursday after Chinese state media praised some US companies for their “strong cooperation” – comments reminiscent of how tensions with the US during the previous trade war were covered by the Chinese press.
At the time, American business leaders and foreign investors scoured Chinese state media for signals about which American companies might be supportive and which might be punished if tensions rose.
State-owned Global Times highlighted Apple (NASDAQ:), Tesla (NASDAQ:), Starbucks (NASDAQ:) and HP (NYSE:) late on Wednesday.
“US politicians should pay attention to and respect the clear willingness of US companies for economic and trade cooperation by tailoring appropriate policy environments for businesses,” the report said.
The China Daily also noted this Morgan Stanley (NYSE:) received regulatory approval in March to expand its operations in China, citing this as evidence of foreign financial companies’ enthusiasm to invest in China.
“Neither side was good at communicating policy directly, so the business community was busy looking at the tea leaves and trying to separate signal and noise in traditional and social media,” said a Beijing-based US executive about the first trade war.
The director was not authorized to speak to the media and declined to be identified.
During the US-China trade war during Trump’s first term, China threatened to ban US companies from importing, exporting and investing in China with the creation of the ‘Unreliable Entity List’.
At the time, Global Times reported that the list would focus on US companies such as Apple, Cisco Systems (NASDAQ:) and Qualcomm (NASDAQ:). But China never followed through on this threat and so far the list only includes US companies involved in selling weapons to Taiwan.
Bo Zhengyuan, a Shanghai-based partner at consultancy Plenum, said he expected Beijing would not rush to use tools like the Unreliable Entity List in the immediate aftermath of a formal tariff announcement once Trump is in power, given the weak state of the Chinese economy. .
But Beijing could retaliate later if it believes U.S. policymakers are harming China’s commercial interests.
“Last time there was collateral damage, and this time there will be collateral damage,” he added.
