How drug labs in China fuel Trump’s global trade war

Chinese chemical company Amarvel Biotech didn’t bother with the dark web.

It touted for customers in the public marketplace of the open internet, where it sought a foothold in the lucrative trade of fentanyl ingredients – the starting point in a supply chain that has killed hundreds of thousands of Americans.

“Mexico hot sale” and “100% stealth shipping”, the Wuhan-based company spruiked, offering guarantees of customs clearance using a Mexico-based shipping company.

Xi Jinping and Donald Trump are at the opposite ends of the fentanyl crisis in the US.Credit: Illustration: Stephen Kiprillis

The brazen marketing of fentanyl precursors – the chemicals used to make the deadly drug – on the company’s network of websites included photos and images of mounds of white substances in dishes, advertised as “in stock”, with the chemical compound number listed alongside.

Amarvel is just one of the many Chinese chemical companies that US authorities allege are fuelling the fentanyl crisis on American streets, while acting with impunity from prosecution in China.

The issue has escalated to a major point of geopolitical tension between the US and China and was the pretext given by US President Donald Trump for imposing 10 per cent tariffs on all Chinese imports this week, kicking off a new trade war between the two countries.

Trump also levelled 25 per cent tariffs at Canada and Mexico to punish them for their role in the fentanyl crisis, but agreed to delay the tariffs after both countries took steps to beef up law enforcement measures.

An online ad for fentanyl precursors by Amarvel Biotech as provided by the US Attorney’s Office, Southern District of New York.

In Manhattan last week, a court convicted Amarvel Biotech executive Qingzhao Wang and marketing manager Yiyi Chen on charges of fentanyl precursor importation and money laundering after they were arrested in an elaborate sting in Fiji by US drug enforcement agents in 2023. They were acquitted of the top charge of fentanyl distribution.

According to documents filed in court, the pair shipped more than 200 kilograms of precursor chemicals to California after negotiating a deal with undercover agents – enough to make 25 million lethal doses of fentanyl, US authorities said.

Their conviction, among the first US prosecutions of Chinese company executives in connection with the fentanyl trade, was a significant victory for US drug enforcers in exposing the role Chinese operations play in the supply chain.

But it won’t put a dent in the flow of trade itself, which has burgeoned into a massive criminal industry over the past decade, involving Mexican drug cartels capitalising on American opioid addiction – and a flourishing chemical manufacturing sector in China that supplies what the cartels need.

China’s role in the fentanyl trade

Fentanyl, a synthetic opioid, is legally used in hospital settings to treat severe pain. In 2014, with America in the grips of a prescription opioid epidemic, it arrived in street markets and soon began replacing heroin as the main illegal opioid.

Fentanyl is cheaper and 50 times more potent than heroin, and overdosing on fentanyl is now the leading cause of death for Americans aged 18 to 49.

Fentanyl precursors are mostly made in China, though India has been identified by US agencies as an emerging source.

China’s booming chemical and pharmaceutical industry, a product of the country’s rampant economic growth over the past few decades, made it an obvious source for cheap synthetic opioids, says John Coyne, a transnational organised crime expert at the Australian Strategic Policy Institute.

In China, tens of thousands of manufacturers produce chemicals and pharmaceuticals for a range of purposes and locations, much of it destined for legal use.

“Unfortunately, nearly all of the synthetic opioids and synthetic opioid precursors can trace their origins back to mainland China and the Chinese chemical and pharmaceutical industry,” Coyne says.

Some of the precursors that make it into the illicit economy are diverted away from legal production, while others have no other purpose than in the manufacturing of illicit drugs. At the same time, there has been a rise in intermediary companies that market fentanyl precursors online and will seek out a company to manufacture it on a “don’t ask, don’t tell” basis, Coyne says.

A Sinaloa cartel cook works on an order of illicit fentanyl in Culiacan, Mexico, in December.Credit: Meridith Kohut/The New York Time

Overwhelmingly, Mexico is the main transit hub for fentanyl products arriving in America. The precursors are sent from China to Mexico, where they are processed into powder and pills by cartels in clandestine labs and trafficked across the border via land, sea, air and underground.

Trump has claimed the fentanyl coming across the border from Canada is also “massive”, but US customs data shows the opposite. In 2024, border authorities intercepted about 19 kilograms of fentanyl at the US northern border (0.2 per cent), compared with almost 9600 kilograms at the south-west border with Mexico (97 per cent).

The remaining 3 per cent, or 317 kilograms, was seized at US coastal borders or internally and was likely to have included direct shipments from China.

As deaths from fentanyl and other synthetic opioids have piled up – almost 75,000 Americans in 2023 alone – US politicians have increasingly blamed China for the crisis, with some even accusing the Chinese government of being directly complicit.

Former US attorney-general William Barr, testifying last year before a US House committee examining the Chinese Communist Party’s role in the supply chain, said without China’s production and export of precursor chemicals, “there would be no fentanyl crisis in the United States, and the mass slaughter would effectively stop”.

“It’s simply hard to believe that a country with the most pervasive system of social control and surveillance in the world was not fully aware of the massive drug trafficking,” Barr said.

A tray of crystal flakes that a Sinaloa cartel cook said was a chemical called sodium hydroxide, a key fentanyl ingredient, sits on a countertop in Culiacan, Mexico.Credit: Meridith Kohut/The New York Times

The committee’s final report found that China was directly subsidising the manufacturing and export of fentanyl materials through tax rebates – though some experts have disputed the link between providing subsidies and incentivising criminal activity. It also accused Chinese authorities of failing to prosecute precursor manufacturers and, at times, working against US law enforcement efforts by tipping off targets of US investigations.

Beijing maintains it has worked closely with the US on counter-narcotic operations but regards American addiction and demand for fentanyl as the key source of the crisis.

“Fentanyl is a problem in the United States, and the root cause lies in the United States itself,” Chinese Foreign Ministry spokesman Lin Jian said last week, as Beijing returned serve and imposed a raft of tariffs on US goods and other trade restrictions.

“Scapegoating others cannot solve problems. Trade and tariff wars have no winners. Pressuring or threatening China is not a right way to engage with us.”

Dr Zongyuan Zoe Liu, a senior fellow for China studies at the Council on Foreign Relations, says the Chinese government does not have a calculated policy of incentivising precursor production to damage America. Instead, a key driving factor is narrow profit margins and growing competition among thousands of small chemical manufacturers.

“The intent is not that they are fuelling the drug crisis. They want to make a sale. Basically, from the manufacturers’ point of view, it’s a case of ‘we don’t care’,” she says.

What has China done so far?

China regularly highlights the fact that in 2019, it designated all forms of fentanyl as a controlled substance, effectively banning its manufacture, except in tightly regulated circumstances. It did this as a concession during the last trade war in Trump’s first term in office as he declared the opioid crisis a national emergency.

Experts say this significantly curtailed fentanyl imports into America, but manufacturers soon switched to making the precursor chemicals instead. Last year, China added a number of precursors to its controlled substances list, but manufacturers are constantly adapting their formulas to subvert such controls.

This move followed the creation of a US-China joint counter-narcotics working group in January 2024 after Chinese President Xi Jinping and then-US president Joe Biden agreed to resume co-operation on combating the fentanyl trade following more than a year of frozen diplomatic ties.

Dr Vanda Felbab-Brown, an organised crime expert at the Brookings Institution, says China wields its co-operation on law enforcement as a tool to advance its own interests, and this has been the case with the US and fentanyl.

“With countries with whom it has bad relations or with whom relations deteriorate, it denies the co-operation. So when China announced in 2022, no more co-operation with the US, it acted very much according to its standard script,” Felbab-Brown told a Brookings Institution podcast in October.

She said China’s actions so far are the low-hanging fruit of co-operation.

“What we really haven’t seen is robust prosecution in China … [the] most important dimension is for China to start rounding up violators of the regulations and prosecuting them,” she said.

What impact will the tariffs have?

There have been signals from Beijing that it is keen to cut a deal with Trump on trade – a view that Chinese analysts have also endorsed – and this could extend to further co-operation on fentanyl trafficking.

China’s response to Trump’s tariffs is widely viewed as a relatively measured response, with duties targeted at a limited range of US imports, including crude oil, LNG and farm equipment, rather than sweeping tariffs.

“In other words, they are leaving room for negotiation. They are not retaliating,” says Liu.

Trump and Xi had a deal to curb the fentanyl trade, but drug makers switched to ingredients instead.Credit: AP, Bloomberg

“In terms of anti-drug co-operation, could there be more done between the two governments? I think so. But tariffs and retaliation may not necessarily be the best incentive.”

Coyne says a major breakthrough is unlikely.

“China may give some ground, like they did with Biden, and list some more chemicals. But I don’t see that the Chinese are going to go out of their way, and certainly not after being threatened to do so,” he says.

Much will depend on the nature of the negotiations that occur between Xi and Trump, and it is unclear when these might happen. A mooted phone call between the leaders was called off this week amid the tariff tit-for-tat.

Meanwhile, drug researchers continue to point out that greater law enforcement measures will be ineffective unless the US steps up efforts to treat addiction among Americans because where there is demand, crafty suppliers will find a way to meet it.

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