Chinese and U.S. flags fly near the Bund before a U.S. trade delegation meets with a Chinese trade delegation in Shanghai, China, July 30, 2019.
Ally Song | Reuters
BEIJING – President-elect Donald Trump plans to increase tariffs by 10% on all Chinese goods imported into the United States, according to a post on social media platform Truth Social.
The post comes shortly after President Trump said the first of “many” executive orders on January 20 would impose a 25% tariff on all products from Mexico and Canada. Such a move would end the region’s free trade agreement.
Trump, who will be sworn in as the next US president on January 20, cited illegal immigration and illegal drug trafficking as reasons for the tariffs.
“We have had numerous discussions with China about the large amounts of drugs, especially fentanyl, coming into the United States, to no avail,” President Trump said. He claimed that contrary to promises, the Chinese government did not impose the death penalty on such drug dealers.
Fentanyl, a synthetic opioid, is an addictive drug that causes tens of thousands of overdose deaths in the United States each year.
Reducing the illegal supply of drug precursors, which are primarily produced in China and Mexico, is an area where the U.S. and Chinese governments have agreed to work together.
“No one wins in a trade war or a tariff war,” Chinese Embassy Spokesperson Liu Pengyu told X, adding that economic and trade cooperation between the two countries is “inherently mutually beneficial.”
Liu pushed back on President Trump’s claims that China is doing little to stop fentanyl from entering the United States, and said Chinese President Xi Jinping met with U.S. President Joe Biden in November 2023. Since then, anti-drug teams from both countries have been in regular contact, he said.
“Drugs are coming into our country primarily through Mexico, and the levels are at unprecedented levels,” President Trump said. “Until they stop, we will impose additional 10% tariffs on China, above and beyond any additional tariffs, on many Chinese products imported into the United States.”
During his presidential campaign, Trump threatened to impose 60% tariffs on Chinese goods.
Kinger Lau, chief China equity strategist at Goldman Sachs, said on CNBC’s “Squawk Box Asia” on Tuesday that the 10% tariffs on China are lower than market expectations of 20% to 30%. He expects China to cut interest rates, increase fiscal stimulus and moderate its currency to counter the economic impact of higher tariffs.
U.S. President Donald Trump joins Mexican President Enrique Peña Nieto and Canadian Prime Minister Justin Trudeau to deliver a statement on the signing of a new free trade agreement in Buenos Aires on the sidelines of the G20 Summit, November 30, 2018. arrived at. Summit.
Saul Loeb | AFP | Getty Images
According to U.S. data as of September, the U.S.’s largest trading partner is Mexico, followed by Canada and China.
On Tuesday, Mexican President Claudia Sheinbaum Pardo signaled that Mexico is prepared to respond to new tariffs by the Trump administration with its own retaliatory tariffs.
“The answer to the immigration phenomenon and drug use in the United States is not threats and tariffs,” she wrote. “One tariff will be followed by another until our collective enterprise is at risk.”
Mexican President Claudia Sheinbaum holds a press conference the day after the U.S. presidential election at the National Palace in Mexico City, Mexico, November 6, 2024.
Raquel Cunha | Reuters
Canadian Prime Minister Justin Trudeau said Tuesday that he spoke by phone with President Trump that morning.
“It was a good decision,” Prime Minister Trudeau told reporters, but did not specifically mention the threat of tariffs. “We know this is a relationship that requires some effort, and that’s what we’ll do.”
According to Chinese customs data, the United States is China’s largest trading partner on a single country basis. The Asian country’s largest regional trading partners are the Association of Southeast Asian Nations and the European Union.
Andy Rothman, investment strategist at Matthews Asia, told CNBC’s “Street Signs Asia” on Tuesday that China and the United States still have “very important commercial and economic ties.” He said China is unlikely to take retaliatory action for now, noting that the Chinese government typically does not respond aggressively.
As of Tuesday morning, the U.S. dollar was up about 1% against the Mexican peso and 1.4% against the Canadian dollar. The dollar rose about 0.2% against the yuan traded in Hong Kong.
—CNBC’s Hui Jie Lim and Anniek Bao contributed to this report.
