China warns of mutually destructive tariff war as Trump threatens new trade measures

Chinese state media has cautioned that President-elect Donald Trump’s pledge to impose additional tariffs on Chinese goods risks igniting a devastating tariff war between the world’s two largest economies. The warning follows Trump’s announcement of sweeping tariff hikes on China, Mexico and Canada, aimed at curbing fentanyl trafficking and illegal migration.

Driving the news: Trump on Monday doubled down on his trade agenda, promising an “additional 10% tariff” on all Chinese imports unless Beijing halts the flow of fentanyl precursors. He also reiterated plans for 25% tariffs on goods from Canada and Mexico to pressure them on drug and migration issues. While Trump’s prior tariffs during his first term ranged from 7.5% to 25%, he has floated much higher rates, potentially exceeding 60%. His trade picks, including Jamieson Greer as U.S. trade representative, signal an aggressive return to protectionist policies. Trump argues these measures will restore U.S. manufacturing dominance but has drawn criticism for risking inflation and violating trade agreements like the U.S.-Mexico-Canada Agreement (USMCA).
What Chinese state media are saying: Chinese state media outlets, including China Daily and the Global Times, reportedly dismissed Trump’s justification for the tariffs as “farfetched” and warned that weaponizing trade would harm all parties involved. Meanwhile, experts in Beijing described the fentanyl-related rationale as “untenable” and emphasized China’s ongoing anti-drug cooperation with the U.S. Chinese officials also highlighted their economic vulnerabilities, with falling corporate profits and downgraded growth forecasts. President Xi Jinping reaffirmed China’s resilience, stating the nation remains committed to long-term development despite external pressures. Nonetheless, analysts warned of growing risks to China’s $19 trillion economy and its critical export sectors.
The big picture: The escalating rhetoric underscores unresolved tensions between the U.S. and China, as Trump’s proposed tariffs threaten to destabilize global supply chains already reshaped by his first trade war. Since 2018, U.S. firms have shifted production from China to other hubs like Vietnam and Mexico, reducing China’s share of U.S. imports to its lowest level in two decades. However, many goods still contain Chinese components, keeping the two economies intricately linked. Economists warn that broad tariffs could stoke inflation, erode consumer purchasing power and provoke retaliatory measures, echoing the challenges of Trump’s first term.

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