Wielding the "baton of tariffs "on the pretext of the fentanyl issue is counterproductive, says Chinese Ambassador to the US Xie Feng, as Washington plans to impose an additional 10 percent duty on imports from China.
Speaking at the Duke-UNC China Leadership Summit via video link on Friday, Xie said two-way trade between China and the United States exceeded $680 billion last year, and about 73,000 US companies are investing in China.
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"The extensive common interests we share and the vast room for cooperation we enjoy are there for everyone to see. Any attempt to decouple and disrupt supply chains would cause a heavy blow, and any trade war or tariff war would inflict greater injury on oneself than others," he said.
On Thursday, US President Donald Trump announced plans to impose tariffs on Canada and Mexico starting Tuesday, in addition to doubling the 10 percent universal tariff charged on imports from China, citing the fentanyl issue.
The following day, China's Foreign Ministry noted that the US is using the fentanyl issue "as a pretext to exert tariff pressure and blackmail, acting arbitrarily and showing ingratitude for China's cooperation".
"This will not solve their concerns. It is only counterproductive and will deal a heavy blow to the dialogue and cooperation with China on counternarcotics," ministry spokesman Lin Jian said.
"Pressuring, coercion and threat is not the right way to deal with China. Instead, mutual respect is the basic prerequisite."
Xie also noted that as early as 2019, China became the first country to schedule fentanyl-related substances as a whole class, and the progress in China-US counternarcotics cooperation in recent years has been widely recognized.
The shared aspiration of the Chinese and US people for a better life is "unstoppable", he said.
"The two sides need to bear in mind the mutually beneficial nature of our bilateral relationship and get more big things done, to the benefit of both our countries and the world," Xie said.
Even as the Trump administration cites security and drug-trafficking issues, the economic effect of the threatened tariffs will ultimately land on US consumers and contribute to inflation, according to researchers.
New research from the Federal Reserve Bank of Atlanta released on Friday suggests that the additional tariffs are projected to increase the prices of everyday retail goods, such as food, beverages and general merchandise, by roughly 0.8 percent to 1.6 percent.
At consumers' cost
"While higher tariffs create tariff revenue and favor domestic producers, the price consumers must pay to buy imported goods will increase because firms typically pass some portion of the tariff's cost onto consumers," Atlanta Fed researchers Salome Baslandze, Simon Fuchs, KC Pringle and Michael Dwight Sparks wrote in the paper.
Earlier last month, Trump threatened and then paused for a month new waves of tariffs on Canada and Mexico, but went ahead with additional tariffs on Chinese goods.
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Following that move, the Peterson Institute for International Economics in Washington estimated that the 25 percent tariffs on most imports from Mexico and Canada, combined with the additional tariffs on Chinese goods, would cost the typical US household more than $1,200 a year in higher prices.
The prospect of new tariffs prompted former US treasury secretary Lawrence Summers to deem the move "a self-inflicted wound to the American economy".
"I'd expect inflation over the next three or four months to be higher as a consequence," Summers said in a TV interview on Feb 2.
