The US Could Tariff China’s $3.5 Billion Mega Port in Peru

View of the Chancay mega port in the small town of Chancay, north of the Peruvian capital Lima, on Oct. 29, 2024. Cris Bouroncle/AFP via Getty Images

Commentary

Chinese leader Xi Jinping opened a mega port in Peru on Nov. 15. Beijing plans to make the $3.5 billion deepwater port the start of a road network that reaches throughout Latin America and extracts raw materials such as lithium, iron ore, and soybeans in exchange for China’s electric vehicles, electronics, and other exports.

China already exports $33 billion more annually to Latin America than Latin America exports to China. The port will accelerate that dynamic, which used to be denounced as mercantilism: a country’s accumulation of wealth through massive exports combined with tariffs and regulations that limit imports. Now, economists with links to corporations that export to China defend its trade accumulation as if it were their own.

The aggressive mercantilism of the Chinese Communist Party (CCP) is why U.S. President-elect Donald Trump has made such a big deal of China’s nearly $1 trillion annual global trade deficit, despite the economists, and why he plans to give China some of its own medicine in the form of high tariffs—as high as 60 percent. These tariffs, which could get even higher, will punish the CCP and help revive U.S. manufacturing, which are compelling reasons.

But they will not stop the CCP from shifting its trade and growing its power elsewhere. Beijing’s answer to the tariffs will be, in part, to shift exports that previously went to the United States to Latin America and other parts of the “Global South,” including Africa, South Asia, and Southeast Asia. Xi will use trade with other countries, combined with anti-U.S. ideology, to try to reorient the world away from Washington and to Beijing—not only economically, but also diplomatically. That is the nature of the geopolitical conflict that Beijing has decided to pursue.

The CCP is using the wealth China accumulates through trade to build a global military that is on its way to being more powerful than the U.S. military. At that point, the CCP will be able to impose authoritarian measures globally at an even faster rate than it is achieving now with its influence in places such as Russia, Iran, and North Korea.

Ultimately, the CCP wants global hegemony, as experts recognize. To get there, the CCP could use a more powerful People’s Liberation Army (PLA) to start taxing U.S. international trade or impound U.S. commercial and naval ships. This would give the CCP even greater wealth and military power with which to impose its influence.

The PLA’s rapid expansion on the back of China’s growing trade puts the world at a tipping point. The CCP threatens to replace the U.S. rules-based order, which has been in place since World War II, with a far more authoritarian and communist order that could then be used to transform democracies and free markets everywhere into the image of the CCP. Just look at what the CCP has done to places such as the Xinjiang region, Tibet, Hong Kong, and the South China Sea for clues as to what it will do to the rest of the world if it gets the chance.

The Peruvian mega port, called the Port of Chancay, is emblematic of this shift toward the CCP. It is much more than a port for Beijing. It will give the CCP—for the first time and by contract with Peru—near total control of what goes in and out of the port, including from outside of Peru. This is unprecedented for a China-built port anywhere in the world, and there are many.

The CCP’s Peru contract is for 30 years and was signed without public consultation. Beijing will likely use the port for military and intelligence purposes in addition to trade. The Peruvian government in Lima will be unable to do much, since it gave away its sovereign rights to decide imports and exports. Lima’s giveaway of these rights was reportedly a mistake and later disputed by Peru. Still, Beijing refused to change the contract and threatened the country with sufficient consequences to get it to back down.

The port is, therefore, arguably the sovereign territory of China rather than Peru. This is likely why Xi opened the port personally—he sees it as part of his historical legacy. The port indicates the expansion of CCP control of global trade at a qualitatively higher level, one that compromises the sovereignty of the countries where the CCP operates.

Chancay is like what the port of Hong Kong was to the British Empire for more than 150 years—a lucrative and sovereign gateway of trade to an entire continent. The CCP’s disruption of Peru’s sovereignty is yet another piece of evidence that the CCP’s denunciation of British or American “imperialism” is hypocritical and self-serving. Beijing is only against the imperialism of others.

Latin America used to be under the protection of the U.S. Monroe Doctrine of 1823. Under its terms, President James Monroe would not allow authoritarian powers such as the Spanish or British empires to meddle in Latin America. Now, Washington allows what is arguably a far worse authoritarian threat—the CCP—near free rein on the continent. The United States does so because of the failed policy of allowing the privileges of global free trade to CCP-controlled China.

Nobody ever elected the CCP. It has no popular mandate. So there is no ethical reason that the United States or our allies should give the same trade privileges to CCP-controlled territory as we do to democracies and our other allies and partners. The CCP has no right to impose its control over China, much less over a Peruvian port more than 10,000 miles away, even if the Peruvian president was tricked into signing an unenforceable contract giving away the country’s sovereignty.

Meanwhile, the CCP is bullying the U.S. Navy and our partners in places such as the South China Sea and the Taiwan Strait, through both of which we are allowed to traverse by international law. As long as China is complicating U.S. and allied shipping in those places, there are plenty of ways for the United States to respond in kind by complicating CCP-controlled shipping to Latin America.

At least until the CCP retreats from its illegal claims over Taiwan and the South China Sea, the United States could easily impose a 30 percent tariff on China’s Latin American trade. This would help our South China Sea partners, including Taiwan and the Philippines, with their defense expenditures. If the Chinese regime’s massive cargo ships do not pay the tax, the U.S. Navy could impound and sell them to even better effect.

Given the growing U.S. national debt, this is the kind of winning financial approach to China that we need, and that Trump has taken successfully in the past. His tariffs on China in his first term were shocking at first but gradually accepted globally, including by the Europeans, who now impose their own tariffs on China. If we do not tax China’s global shipping, countries such as Taiwan and the Philippines will not have the money to defend themselves. Countries such as Peru will be tricked into giving away their sovereignty, thus opening themselves to exploitation by the CCP. That would be to the detriment of the United States, liberty, democracy, human rights, international law, and, in the long run, the entire world.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.