President Donald Trump announced discussions on imposing a 10% tariff on China, potentially set to take effect as soon as February 1, citing the country’s role in fentanyl distribution to the U.S. via Mexico and Canada.
Speaking at the White House, Trump explained the tariff strategy as a response to the synthetic opioid crisis, with fentanyl contributing to thousands of overdose deaths annually in the United States.
The opioid issue has been a rare area of cooperation between Washington and Beijing, with Chinese President Xi Jinping urging collaboration during a recent phone call with Trump. Despite this, the proposed tariff marks a sharp pivot from Trump’s earlier campaign promises, which suggested import tariffs as high as 60% across the board on Chinese goods.
The announcement comes amid uncertainty about the motivations behind Trump’s rapid change in direction. Analysts at the Peterson Institute for International Economics warned of potential economic fallout, estimating that a mutual 10% tariff could reduce U.S. GDP by $55 billion over Trump’s second term, while China could see a $128 billion less.
Despite the hint of tariff increases, the confirmation of a start date with lower-than-expected imposition buoyed markets, with the Dow Jones Industrial Average surging over 500 points. Wall Street remains generally wary of tariffs due to their potential to drive up costs for American consumers and stoke inflation, an ongoing concern following recent economic instability.
