China warns ‘no one will win’ if Donald Trump starts trade war

China shot back at Donald Trump after the incoming US president pledged to impose heavy import tariffs on the Asian nation, along with Canada and Mexico, saying it could trigger a trade war that “no one will win”.

Mr Trump claimed he would immediately after his inauguration on 20 January sign an executive order imposing a 25 per cent tariff on all goods coming from Mexico and Canada if the two countries did not take steps to curb the alleged flow of drugs and migrants into the US.

He outlined an "additional 10 per cent tariff, above any additional tariffs" on China, to curb the alleged smuggling of the synthetic opioid fentanyl into the US.

"Representatives of China told me that they would institute their maximum penalty, that of death, for any drug dealers caught doing this but, unfortunately, they never followed through," the Republican wrote on his social media app Truth Social.

A Chinese embassy spokesperson in Washington responded that Beijing believed trade and economic cooperation between the two nations was mutually beneficial.

"No one will win a trade war or a tariff war,” Liu Pengy was quoted as saying by Reuters.

China had taken several steps since 2023 when it agreed to curtail the export of items related to the production of fentanyl, a leading cause of drug overdoses in the US, he added.

"All these prove that the idea of China knowingly allowing fentanyl precursors to flow into the United States runs completely counter to facts and reality," the spokesperson said.

The National Center for Health Statistics estimates that at least 74,700 people in the US died due to fentanyl overdose in 2023. President Joe Biden had repeatedly called on Beijing to do more to stop the production of ingredients used in fentanyl and over the years dramatically increased tariffs on Chinese products.

Mr Trump previously pledged to end China's most-favored-nation trading status and slap tariffs on imports from the country in excess of 60 per cent, much higher than those imposed during his first term.

China is the main supplier of imports to the US, accounting for over 16 per cent of the goods brought from abroad. The Chinese imports to the US range from finished products to components and raw materials that are used across virtually every American industry.

The US received imports worth $427bn (£340bn) from China last year and exported goods worth $148bn (£118bn ) to the Asian giant.

Mr Trump’s threatened new tariff would appear to violate the terms of the US-Mexico-Canada Agreement on trade (USMCA). The deal, which Mr Trump signed into law, took effect in 2020, and continued the largely duty-free trade between the three countries. Canada and the US at one point imposed sanctions on each others’ products during the rancorous talks that eventually led to USMCA.

Mr Trump will have the opportunity to renegotiate the agreement in 2026, when a “sunset” provision will force either a withdrawal or talks on changes to the pact.