US imposed tariffs on China are counterproductive for global trade

Staff Writer | Monday March 24, 2025 14:20

The following day, the spokesperson of the Chinese Foreign Ministry stated that China firmly deplored and opposed this move and would take necessary countermeasures to defend its legitimate rights and interests. Indeed, a new tariff is counterproductive not only when it comes to efforts to rein in the production and distribution of fentanyl but also for bilateral trade relations. China, as the world’s second-largest economy, has proven its resilience to external shocks, including the U.S.-China trade tensions of recent years. The proposed tariffs, however, arrive at a challenging juncture for China, characterised by deflationary pressures, a real estate sector downturn, and ongoing structural reforms aimed at transitioning toward a consumption-driven economy. The imposition of tariffs would likely dampen China’s export-driven sectors, especially those reliant on U.S. markets. Yet, China’s strategic pivot toward high-tech manufacturing, renewable energy, and domestic consumption provides a buffer against these external pressures.

Moreover, its diversified trade portfolio, including robust ties with ASEAN, Africa, and the European Union, ensures that it is not solely dependent on the United States. China’s approach to economic policy remains pragmatic and forward-looking. Initiatives such as the Belt and Road Initiative (BRI) continue to deepen trade relations with developing countries, creating alternative avenues for growth and reducing reliance on Western markets. Additionally, China’s strong emphasis on maintaining a stable yuan will prevent excessive economic disruption, even if currency adjustments are necessitated by external factors. It is important to note that trade wars are not isolated events; they ripple through the global economy, affecting nations far beyond the primary actors. Developing countries that serve as intermediaries in supply chains or as beneficiaries of Chinese and U.S. investment are particularly vulnerable. The uncertainty caused by trade disputes disrupts their economic planning and growth trajectories. Moreover, tariffs tend to provoke retaliatory measures, triggering trade wars that harm all participants. Past experiences demonstrate that no one emerges unscathed from such conflicts.

The resulting instability can erode investor confidence, slow down global growth, and deepen economic inequalities, particularly in developing nations reliant on trade with major economies like China and the U.S. A way forward: Protecting global trade China has expressed its willingness to engage in constructive dialogue with the United States to address trade and economic concerns. This approach not only reflects China’s confidence in its economic fundamentals but also its commitment to preserving the stability of global trade. By fostering mutual respect and focusing on shared goals, the two nations can avoid a zero-sum game and work toward solutions that benefit both sides. For the U.S., it is essential to recognise that imposing tariffs may address short-term political goals but will exacerbate economic challenges in the long run. A collaborative approach, emphasising fair competition and shared prosperity, offers a far more sustainable path. Summary The imposition of tariffs by the United States on Chinese imports is a high-stakes gamble that risks destabilising the global economy while failing to address the underlying issues it seeks to resolve. China, while facing challenges, remains resilient and committed to dialogue and cooperation. As history has shown, no one wins a trade war. The path forward must prioritise collaboration, mutual benefit, and the recognition that in an interconnected world, collective prosperity is the only viable foundation for long-term stability.

The unilateral sanctions imposed by the US risk weakening its anti-drug cooperation with China and may also force fentanyl precursor transactions to be conducted on the black market or through third countries, making law enforcement even more difficult. Furthermore, these unilateral sanctions imposed violate the basic principles of the World Trade Organisation (WTO), of which both China and the US are members. According to the 1947 General Agreement on Tariffs and Trade (GATT) – the precursor to the WHO – trade shall be conducted in a non-discriminatory manner. However, the unilateral sanctions imposed by the US on specific countries or enterprises essentially constitute discriminatory treatment. This undermines fair competition among WTO members and poses a potential threat to multilateral trade rules. Additionally, the US practices violate the principle of national treatment laid out in Article III of GATT. The article requires that imported products must not be accorded unfavourable treatment based on their origin after entering the territory of a WTO member. The sanctions the US imposed may directly restrict the import of legal drugs or their precursor chemicals, resulting in discrimination against imported goods from China.

The frequent use of unilateral sanctions by the US not only violates the core rules of the WTO but also disrupts the international trade order and multilateral cooperation. In particular, abusing exception clauses may prompt other countries to question the fairness and efficacy of WTO rules. The possible retaliation in response to US tariffs from other WTO members could lead to a global trade conflict and encourage the trend towards fragmentation of the global trading system. The US needs to view and solve its own fentanyl issue in an objective and rational way instead of threatening other countries with arbitrary tariff hikes. Trade and tariff wars have no winners. Pressuring or threatening China is not the right way to engage, as my country will firmly defend its legitimate rights and interests. Keeping business ties between China and the US robust serves the fundamental interests of both countries and both peoples, and benefits global economic growth. China hopes the US will work with it to address concerns through equal-footed consultation, maintain the hard-won positive dynamics in counternarcotics cooperation, and jointly promote the steady, sound and sustainable growth of bilateral trade and economic ties.