The USA accuses China of flooding the markets with artificially discounted products. Now Washington is reacting and massively increasing import tariffs on many products from China – including electric cars, semiconductors and solar cells.
US President Joe Biden is blocking electric cars from China from entering the USA with tariffs of 100 percent. The US government is also imposing new or significantly increased tariffs on, among other things, solar cells, semiconductors, harbor cranes and medical items such as cannulas and protective masks. China is flooding global markets with artificially cheapened exports, the US government said in its announcement.
At the same time, the measures are limited to a few strategically important areas. Biden is striving for a stable relationship with China, the director of the White House National Economic Council, Lael Brainard, assured journalists. She did not want to speculate about possible retaliation from Beijing. According to the US government, imports from China worth $18 billion will be affected by the new measures.
Warnings from the local economy
Chinese electric cars were already subject to tariffs of 25 percent in the USA, which – unlike in Europe – kept them out of the market. Chinese manufacturers receive unfair subsidies and could thereby distort competition with cheap vehicles, said Biden’s economic advisor Brainard. Chinese electric car exports will have increased by 70 percent in 2023 – and that is endangering investments in other countries, argues the US government. “The president will not allow this to happen,” Brainard said.
Tesla boss Elon Musk, among others, warned of the dominance of Chinese manufacturers at the beginning of the year: “If there are no trade barriers, they will pretty much destroy most other car companies in the world.” In his hometown of Scranton, Pennsylvania, Biden saw what happens when production moves to other countries, the trade representative said. That’s why he wants to ensure fair competition.
Biden, who wants to run for re-election in November, made tens of billions during his term in office for investments in, among other things, the chip industry, infrastructure and manufacturing. Biden’s predecessor Donald Trump had already imposed tariffs on imports from China.
China speaks of Election campaign maneuvers Bidens
China reacted with criticism to the US announcement and sees the increased tariffs primarily as an election campaign maneuver by Biden. “The newly announced tariff increase is primarily a symbolic gesture with which the Biden administration is trying to appear tough on China in the midst of the increasingly tough presidential election campaign,” wrote the official Chinese state agency Xinhua.
The Chinese state broadcaster CCTV spoke of an “abuse of trade protectionist measures by the USA”. It will seriously hinder the modernization of the US auto industry. Negative effects are also expected for consumers. In addition, global efforts to combat climate change would be undermined.
Is the EU now also increasing tariffs?
It is unclear whether the EU will follow the US example and also increase tariffs on Chinese products. In any case, Chancellor Olaf Scholz expressed reservations about the USA’s announcement. During his visit to Stockholm, the SPD politician pointed out the “mutual exchange” between the European Union and China. “European manufacturers are successful in the Chinese market and also sell a lot of vehicles that are produced in Europe to China,” said Scholz after a meeting with Swedish Prime Minister Ulf Kristersson. In addition, 50 percent of the electric cars imported from China come from Western brands that produce there.
China denies overproduction
China repeatedly complains about the US’s economic coercion. Instead of correcting tariffs under former President Donald Trump, which the WTO considered a violation, the US continued to politicize economic and trade issues, Chinese Foreign Ministry spokesman Lin Jian recently said. Beijing will take all necessary measures to defend its interests.
China denies that its economic policies are promoting surpluses. “The so-called problem of Chinese overcapacity does not exist, neither from the perspective of a comparative advantage nor in the light of global demand,” emphasized China’s state and party leader Xi Jinping recently in France during his visit to Europe. Instead, the People’s Republic argues that its “green energy” industry has reduced global inflationary pressures and contributed to the fight against climate change. US ministers had already criticized the Chinese economic practices during previous visits to China.