Who would have thought that an opioid drug could trigger a global trade disruption—one that now threatens to push the world’s largest economy into a recession?
It may be recalled that President Trump, in his executive order dated February 1, 2025 (Imposing Duties to Address the Synthetic Opioid Supply Chain in the People’s Republic of China (PRC)), determined that the People's Republic of China (PRC) had failed to stem the sustained influx of synthetic opioids, including fentanyl. The order stated that these drugs posed an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States.
Subsequent executive orders—culminating in the latest on 9 April—shifted focus towards addressing the large and persistent annual US goods trade deficits. Tariffs were imposed on imports from all countries. With regard to the PRC, the dual conclusion—that the PRC had not done enough to curb the production and smuggling of fentanyl, and that the trade deficit with the PRC remained vast—resulted in an unprecedented 145% (now 245%) levy on all goods imported from China. Further, the de minimis exemption (normally applicable to imports valued under $800) was withdrawn for PRC-origin goods. All e-commerce shipments from China are now subject to elevated tariffs.
What then is fentanyl, and why is it of such concern to the United States?
Fentanyl is a potent synthetic opioid, approved by the US Food and Drug Administration (FDA) as an analgesic and anaesthetic. The Drug Enforcement Administration (DEA) has stated that it is 100 times more potent than morphine and 50 times more potent than heroin—and extremely addictive. Just 2 milligrams—the size of a few grains of sand—can lead to overdose. It can be injected, snorted, smoked, taken as a pill, spiked onto blotter paper, and is often sold alone or in even more lethal combinations. Its effects include rapid relaxation, euphoria, dizziness, nausea, respiratory depression—and frequently, death.
First developed in 1959, fentanyl was used widely for medical purposes before its potency and addictive potential were discovered by drug traffickers. It is often called the trafficker’s perfect drug—unlike cocaine or opium, it does not require land for cultivation. A small clandestine lab can produce massive quantities undetected. As profits soared, illicit manufacturing units flourished. Addicts became akin to zombies; the collateral social cost included crime committed to fund addiction, and rising drug overdose deaths.
According to the DEA, over 75,000 deaths occur annually in the US from fentanyl overdoses—a figure which rose to 90,000 by August 2024. A vast majority are linked directly to fentanyl. In this light, President Trump’s claim that "these drugs are threatening the fabric of our society" may not be entirely exaggerated.
The US has long believed that illegal fentanyl supplies originate primarily from China and Mexico. While China claims to have placed all fentanyl-type substances under regulatory control, the US contends enforcement has been lax. There is little visibility of China's effort to curb illicit production. Chinese criminal groups have entered the trade, lured by enormous profits and a vast US market.
The Biden administration initiated measures placing China on the US list of major drug-producing and transit countries. Enforcement actions and sanctions were taken against designated individuals and entities. However, Trump has now weaponised the fentanyl issue, imposing a 145% tariff to counter the crisis. Whether this approach addresses the problem is debatable. After all, where there is demand, there will be supply—licit or otherwise. Drug abuse stems from deep social and psychological pressures that must also be addressed.
The DEA has also stated that India is a source of finished fentanyl powder and precursor chemicals. However, the website of India’s Narcotics Control Bureau (NCB)—the nodal anti-drug agency—does not list fentanyl among its drugs of concern. The Directorate of Revenue Intelligence (DRI), which has made significant seizures of methamphetamine, mephedrone, and pseudoephedrine in recent years, has not reported any fentanyl seizures.
Yet, earlier this year, the US Attorney’s Office released a statement regarding legal action taken against two Surat-based companies, including their founder and a senior executive, for criminal conspiracy to distribute and import fentanyl precursor chemicals. The charge sheet alleged a false declaration in the manifest—describing the contents as vitamin C, which were actually found to be piperidone, a fentanyl precursor.
Indian enforcement agencies must take note of these developments and crack down strongly on the manufacture and export of fentanyl or its precursors. As India already grapples with the impact of 10% tariffs, the last thing it needs is further tariffs imposed for perceived laxity in drug enforcement.
— The author, Najib Shah, is former Chairman, Central Board of Indirect Taxes & Customs. The views expressed are personal.
Read his previous articles here
It may be recalled that President Trump, in his executive order dated February 1, 2025 (Imposing Duties to Address the Synthetic Opioid Supply Chain in the People’s Republic of China (PRC)), determined that the People's Republic of China (PRC) had failed to stem the sustained influx of synthetic opioids, including fentanyl. The order stated that these drugs posed an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States.
The executive order concluded that the PRC had not taken adequate steps to alleviate the drug crisis; fentanyl continued to be illegally imported under false invoices, fraudulent postage, and deceptive packaging. This had resulted in the seizure of over 500,000 pounds of drugs and the deaths of thousands of Americans. The order declared a national emergency under the National Emergencies Act and invoked powers under the International Emergency Economic Powers Act. This Act authorises the President to regulate international commerce in response to such threats. An additional 10% ad valorem duty was imposed on all products from the PRC entering the USA.
Subsequent executive orders—culminating in the latest on 9 April—shifted focus towards addressing the large and persistent annual US goods trade deficits. Tariffs were imposed on imports from all countries. With regard to the PRC, the dual conclusion—that the PRC had not done enough to curb the production and smuggling of fentanyl, and that the trade deficit with the PRC remained vast—resulted in an unprecedented 145% (now 245%) levy on all goods imported from China. Further, the de minimis exemption (normally applicable to imports valued under $800) was withdrawn for PRC-origin goods. All e-commerce shipments from China are now subject to elevated tariffs.
What then is fentanyl, and why is it of such concern to the United States?
Fentanyl is a potent synthetic opioid, approved by the US Food and Drug Administration (FDA) as an analgesic and anaesthetic. The Drug Enforcement Administration (DEA) has stated that it is 100 times more potent than morphine and 50 times more potent than heroin—and extremely addictive. Just 2 milligrams—the size of a few grains of sand—can lead to overdose. It can be injected, snorted, smoked, taken as a pill, spiked onto blotter paper, and is often sold alone or in even more lethal combinations. Its effects include rapid relaxation, euphoria, dizziness, nausea, respiratory depression—and frequently, death.
First developed in 1959, fentanyl was used widely for medical purposes before its potency and addictive potential were discovered by drug traffickers. It is often called the trafficker’s perfect drug—unlike cocaine or opium, it does not require land for cultivation. A small clandestine lab can produce massive quantities undetected. As profits soared, illicit manufacturing units flourished. Addicts became akin to zombies; the collateral social cost included crime committed to fund addiction, and rising drug overdose deaths.
According to the DEA, over 75,000 deaths occur annually in the US from fentanyl overdoses—a figure which rose to 90,000 by August 2024. A vast majority are linked directly to fentanyl. In this light, President Trump’s claim that "these drugs are threatening the fabric of our society" may not be entirely exaggerated.
The US has long believed that illegal fentanyl supplies originate primarily from China and Mexico. While China claims to have placed all fentanyl-type substances under regulatory control, the US contends enforcement has been lax. There is little visibility of China's effort to curb illicit production. Chinese criminal groups have entered the trade, lured by enormous profits and a vast US market.
The Biden administration initiated measures placing China on the US list of major drug-producing and transit countries. Enforcement actions and sanctions were taken against designated individuals and entities. However, Trump has now weaponised the fentanyl issue, imposing a 145% tariff to counter the crisis. Whether this approach addresses the problem is debatable. After all, where there is demand, there will be supply—licit or otherwise. Drug abuse stems from deep social and psychological pressures that must also be addressed.
The DEA has also stated that India is a source of finished fentanyl powder and precursor chemicals. However, the website of India’s Narcotics Control Bureau (NCB)—the nodal anti-drug agency—does not list fentanyl among its drugs of concern. The Directorate of Revenue Intelligence (DRI), which has made significant seizures of methamphetamine, mephedrone, and pseudoephedrine in recent years, has not reported any fentanyl seizures.
Yet, earlier this year, the US Attorney’s Office released a statement regarding legal action taken against two Surat-based companies, including their founder and a senior executive, for criminal conspiracy to distribute and import fentanyl precursor chemicals. The charge sheet alleged a false declaration in the manifest—describing the contents as vitamin C, which were actually found to be piperidone, a fentanyl precursor.
Indian enforcement agencies must take note of these developments and crack down strongly on the manufacture and export of fentanyl or its precursors. As India already grapples with the impact of 10% tariffs, the last thing it needs is further tariffs imposed for perceived laxity in drug enforcement.
— The author, Najib Shah, is former Chairman, Central Board of Indirect Taxes & Customs. The views expressed are personal.
Read his previous articles here
(Edited by : Ajay Vaishnav)
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