Correct Your Wrongdoings: China Issues New Threat as Trump's Tariff War Escalates

Beijing: China warned United States President Donald Trump “to correct its wrongdoings” after the latter recently imposed a 10 per cent duty on Chinese imports. The Chinese Foreign Ministry in a statement said, “China calls on the United States to correct its wrongdoings, maintain the hard-won positive dynamics in the counter-narcotics cooperation, and promote a steady, sound and sustainable development of China-US relationship.” It however did not mention any specific retaliatory measures.

China had argued that by imposing these tariffs, the US violates the World Trade Organisation rules and has vowed to bring a case before the body that governs global commerce.

The Ministry of Public Security on Sunday made near identical charges and the Commerce Ministry also issued a closely worded statement.

This development comes days after, Trump in a big move imposed 25 per cent tariffs on Canada and Mexico and 10 per cent on China.

Who Does China Blame?

Trump has accused China of enabling fentanyl production, which is then turned into pills in Mexico and smuggled into the United States, contributing to approximately 70,000 overdose deaths annually.

Responding to this accusation, China stated that the US should take responsibility for its problems rather than "threaten other nations with arbitrary tariff hikes," according to a statement from the Foreign Ministry. "The US needs to address its fentanyl crisis in an objective and rational manner… China is one of the toughest countries on counter-narcotics, both in policy and enforcement."

The Ministry of Public Security also pointed out that the US has not reported any fentanyl precursor seizures from China since Beijing began legal action against the issue.

What Other Issues May Contribute to the Tensions?

Trump has consistently criticised China's massive trade deficit with the US, which reached nearly $1 trillion last year. Tariffs on Chinese goods would raise prices for US consumers, forcing them to bear much of the cost for everything from toys to clothing.

China's critical export market could be affected if US consumers shift towards “buying American.”

Meanwhile, China's domestic economy has struggled to respond to various government stimulus efforts, and large-scale foreign infrastructure projects, along with mounting public debt, are exacerbating the potential for economic stagnation.

This economic slowdown threatens to derail Chinese President Xi Jinping's ambitions of surpassing the US in key economic and political measures, jeopardizing his long-term goal of asserting Chinese dominance over Taiwan and strengthening China's position in the Indo-Pacific region.

Trump has also made halting illegal immigration a cornerstone of his political platform, including through tariff actions against Mexico and Canada. While illegal immigration from China is a smaller issue, Trump has warned all countries that they will be held accountable for nationals who enter the US unlawfully.

What Tariffs Are Imposed on Canada, Mexico and China?

The tariffs would start at the beginning of Tuesday. There would be an additional 25 per cent tariff on imports from Canada, with a lower 10per cent charge on the oil, natural gas, electricity and other energy products.

Energy products were taxed at a lower level to prevent US consumers and businesses from paying higher prices for gasoline and utilities. Mexican imports would face an additional 25per cent tax. China would face an additional 10per cent tariff.

While Trump has said that foreigners pay these taxes, the tariffs would be paid by the individuals and companies bringing in the goods — which means this would be a domestic tax increase.

Why Has US Imposed Tariffs on Canada, China and Mexico?

Trump's orders say the tariffs are a consequence of illegal immigration and drug smuggling. Not everyone will agree with his reasoning, as US government reports show that unauthorized border crossings from Mexico have fallen over the past year and seizures of fentanyl along the northern border are relatively low.

But Trump's order on Mexico says that drug traffickers and the country's government “have an intolerable alliance” that “endangers the national security of the United States, and we must eradicate the influence of these dangerous cartels.” His order on Canada says that Mexican cartels are operating in that country and claims despite the modest amount of fentanyl intercepted that it would be enough to kill “9.5 million Americans.” The order on China says that country's government provides a “safe haven” for criminal organizations to “launder the revenues from the production, shipment, and sale of illicit synthetic opioids.”

Those are the stated legal reasons, but Trump has expressed a deep admiration to tariffs in general, claiming that they would make the United States wealthier even though they are tax hikes that can be passed along to consumers and businesses in the form of higher prices.

(Inputs from AP)