Global Trade War Escalates as China Confronts Trump's Tariffs

By: Adit Mehta

Over the first few weeks of President Trump’s second term, he announced a slurry of tariffs against Canada, Mexico and China, 25% on imports from Canada and Mexico, along with 10% from China. The White House has cited an increasing amount of illegal fentanyl and substance imports along with an imbalance in the global trade order. 

Leaders in each country responded almost immediately, imposing swift retaliatory tariffs. Following these actions, Canadian Prime Minister Justin Trudeau said “The actions taken today by the White House split us apart instead of bringing us together,” China’s Foreign Minister, Wang Yi, accused Washington of meeting “good with evil”, discussing the trade war between the two nations. 

Beijing has responded in kind to Trump’s tariffs, imposing a 10-15% tax on some US agricultural products including chicken, pork, and soy in an attempt to exploit their influence in US farmers’ overseas markets. Additionally, they restricted 15 US companies from purchasing Chinese products unless they had special permissions. 

Trump’s Opioid Concerns 

The White House fact sheet tells us that the alleged flow of illicit substances such as fentanyl into US borders has spurred a national emergency, including one in the public health sector. China’s foreign minister responded by saying “the abuse of fentanyl is an issue that the US has to solve itself.” 

President Trump’s claims aren’t entirely unfounded. In 2022 and 2023 alone, drug overdoses caused around 110,000 fatalities per year, a majority of them caused by fentanyl overdose. Such overdose has become the leading cause of death between citizens aged 18-45 in the United States. 

However, for the first time in years, the amount of fentanyl related deaths has declined, possibly due to stricter regulation from the Biden administration along with increased cooperation from Mexico and China. Since 2019, Beijing has imposed a ban on all forms of fentanyl and illicit substances. Additionally, in 2024, they reached an agreement with the Biden administration to control certain precursor chemicals that international criminal organizations were using to manufacture fentanyl. 

Despite these efforts, President Trump believes that insufficient work has been done to curb the drug crisis, imposing tariffs as a result. China has warned that such tariffs could take a toll on their domestic efforts to curb fentanyl exports. 

Domestic Worries

China’s economy has largely relied on foreign trade for many years, as foreign trade alone has accounted for nearly 20% of the country's GDP. President Trump’s recent tariffs threaten to upset China’s trade surplus and result in an economic downturn. Experts say that in order to avoid continued slowing growth, China must invest in more domestic sources of demand. 

Beijing already seems to be chasing such solutions. Just in January the government provided $11.2 billion to local governments to boost domestic appliance and auto part demand. The government has also ordered banks to increasingly encourage consumer financing and use of credit cards. 

However, despite ambitious goals regarding domestic consumerism, China falls short of the spending power needed to achieve said goals. While it has enjoyed one of the most robust economies over the past decade, its growth has stagnated. The country has been undergoing a property crisis ever since Beijing decided to reduce subsidies towards construction and property companies, leaving an estimated 4 million apartments empty. Additionally, recent data has shown that tax revenue in the nation is slowing, amounting to less revenue to fund much needed programs. 

In the face of a looming trade war, the ball is certainly in China’s court. Whether Beijing decides  to continue their aggressive resistance against the United States, or divert more attention to their domestic needs, its choice can have long lasting consequences over the rest of the globe.