China’s official media warn Trump not to start a trade war that hurts both sides

Chinese state media told Donald Trump that his plan to put more taxes on Chinese goods because of fentanyl flows could lead to a tariff war between the world’s two biggest economies, which would be bad for both of them.

Trump said on Monday that he would put “an additional 10% tariff, above any additional tariffs” on imports from China until Beijing stopped trafficking the chemicals that are used to make the deadly drug. Trump takes office on January 20.

The two giants are making their stands clear before the former president goes back to the White House. Trump’s first term led to a trade war that shook up global supply chains and hurt all economies by making it more expensive to borrow money and cause prices to rise.

Editorials in journals that speak for the Chinese Communist Party China Daily and the Global Times both said late Tuesday night that the next person who moves into 1600 Pennsylvania Avenue should not “blame China” for the U.S. fentanyl problem or “take China’s goodwill for granted regarding anti-drug cooperation.”

“The excuse the president-elect has given to justify his threat of additional tariffs on imports from China is farfetched,” China Daily wrote.
“When there are tariff wars, no one wins.” If the U.S. keeps using tariffs as a political tool to deal with trade and economic problems, it will hurt everyone.

Economists have started lowering their growth predictions for China’s $19-trillion economy for 2025 and 2026 because they think Trump will impose more tariffs. They are also telling Americans to get ready for the cost of living to go up.

S&P Global Ratings dropped its growth forecast for China to 4.1% in 2025 and 3.8% in 2026 on Sunday. “Right now, the only thing we know for sure is that the risks are high,” said Louis Kuijs, chief Asia economist at S&P Global Ratings.

“In our baseline, we thought that the tariffs would go up from about 14% now to 25% across the board.” So, the amount we thought was a little more than 10% of all goods from China.

Trump is warning Beijing that he will put tariffs on Chinese goods that are much higher than the 7.5% to 25% he put on them during his first term.

China already knows how to deal with the last U.S. tariff strategy, according to Gao Lingyun, an analyst at the Chinese Academy of Social Sciences in Beijing, who was quoted by the Global Times.

“Using counternarcotics issues to increase tariffs on Chinese goods is untenable and unpersuasive,” Gao said.

State news agency Xinhua said that after Trump’s comments, Chinese President Xi Jinping told Lee Hsien Loong, who used to be Prime Minister of Singapore, that China’s economy would continue to grow and improve over the long term. The meeting took place in Beijing on Tuesday.

A different article in the Global Times said that Lee told Xi, “No one should underestimate the Chinese people’s determination for their nation to succeed and stand tall in the world.” This comment was “also meant for some people in (the) international community.”

Data released on Wednesday showed that Chinese companies’ profits dropped 10% year-over-year in October. This shows how hard it is for businesses to stay profitable in an economy that is much more subject to trade shocks this time around.

In a poll done by Reuters last week, economists said they thought the U.S. would add more tariffs running from 15% to 60%. Most people said that Beijing would need to add more stimulus to the economy to make it grow and ease the pressure on exports.

TWO TRADE WARS

Trump had said before that he would put taxes on Chinese goods that were higher than 60%.

China’s industrial complex is scared because it sells more than $400 billion worth of goods to the U.S. every year, as well as hundreds of billions more worth of parts for goods that Americans buy from other countries.

Making trade lawyer Jamieson Greer the new U.S. trade representative is a big deal for someone who was a key figure in Trump’s trade war with China during his first term. It will be a rough four years for trade officials all over the world.

Greer was the chief of staff to Robert Lighthizer, who was Trump’s U.S. Trade Representative at the time. Lighthizer was the one who came up with the idea for Trump’s original taxes on $370 billion worth of Chinese goods and renegotiated the North American free trade deal with Canada and Mexico.

It looks like the new president will break that deal on his first day in office.

Trump also promised to put 25% taxes on goods coming from Mexico and Canada on Monday. He said that these countries were not doing enough to stop drugs and people from crossing their borders.

But China will have to deal with most of Trump’s plans to cut the U.S. trade gap and start the “manufacturing renaissance” he talked about during the campaign.

It’s hard to say what will happen next on this front, Kuijs of S&P Global said. “There are a lot of unknowns.” To reach 60%, there is still a big rise to come.