Tariffs are no 'panacea' for US troubles

Editor's note: Chen Weidong is deputy dean of the Institute of Foreign Law and Governance at University of International Business and Economics. The article reflects the author's views and not necessarily those of CGTN. It has been translated from Chinese and edited for brevity and clarity.

The White House released a fact sheet on February 1, asserting that illegal immigration and drug trafficking – particularly fentanyl – have posed an "extraordinary threat" to the United States, constituting a national emergency under the International Emergency Economic Powers Act (IEEPA). As a response, the administration has announced a 25 percent tariff on products from Canada and Mexico and a 10 percent tariff on goods from China.

However, the fentanyl issue appears to be merely a pretext for the Trump administration to impose tariffs. Under the IEEPA, the US president can enact economic restrictions during a national emergency without congressional approval. Moreover, the president has the authority to declare such an emergency and implement related measures without undergoing specific investigative or procedural requirements. Trump has long championed tariffs and previously classified the fentanyl crisis as an "extraordinary threat," laying the groundwork for his administration to declare a national emergency and wield the "tariff hammer" at will.

Fentanyl abuse is a deeply seated domestic challenge within the US. The origin lies in systemic social problems and governance deficiencies. Yet, the Trump administration has continued to attribute these challenges to foreign countries, promoting tariffs as a "panacea" for America's woes. Under the guise of national security, the administration has leveraged the emergency declaration to impose tariffs, pressuring trade partners into accepting Washington's demands without worrying about being held accountable by the World Trade Organization (WTO). Additionally, imposing tariffs can serve as a means to boost government revenue, incentivize the return of manufacturing, and reinforce Trump's "Make America Great Again" campaign rhetoric.

Mexico, Canada, and China are major trading partners of the United States. The Trump administration has announced tariffs on these countries, hoping to use trade barriers as a bargaining tool to compel them to accept US demands in addressing the fentanyl issue and illegal immigration. Currently, the US has used temporary suspension of tariffs on Mexico and Canada as leverage to secure certain concessions from both countries.

But what results can this "tariff hammer" achieve? It is more likely to backfire. The long-standing trade deficit of US cannot be resolved in just one or two years. Trade imbalances are primarily driven by broader economic factors such as national savings rates, government spending, and consumption patterns, rather than the direct impact of tariffs on imports. During Trump's first term, the large-scale imposition of Section 301 tariffs on China failed to significantly reduce the overall US trade deficit. Imposing additional tariffs on major trading partners now is also unlikely to bring about a substantial reduction.

Furthermore, wielding the "tariff hammer" against foreign countries will not create a security barrier to stop illegal immigration or fentanyl abuse. Under WTO rules, China and other members have the right to challenge the Trump administration's tariff measures through the WTO dispute settlement mechanism, where expert panels are likely to issue rulings unfavorable to the US.

On February 4, China announced tariffs of 10 to 15 percent on certain imports from the US. On the same day, a spokesperson for the Ministry of Commerce reaffirmed that, in order to defend its legitimate rights and interests, China has formally brought the US tariff measures to the WTO dispute settlement mechanism.

The Trump administration's fantasy of using tariffs as a "panacea" for America's social ills is bound to fail. If the US tariffs, coupled with retaliatory measures from China, Mexico, and Canada, further exacerbate domestic inflation in the US, tariffs will not be a cure but a poison that will only worsens the problems.