US anti-China tariffs slammed
Beijing vows to take resolute measures after domestic firms targeted in move criticized worldwide
The decision of the United States to impose additional tariffs on Chinese imports marks a further escalation in Washington’s efforts to curb emerging industries in China, forcing Beijing to adopt retaliatory measures to defend its interests, said analysts and heads of business associations.
In addition to the existing tariffs under Section 301 of the US Trade Act of 1974, on May 14 the US announced additional tariffs on $18 billion worth of Chinese imports, including electric vehicles, lithium-ion batteries, photovoltaic cells, critical minerals, semiconductors, steel, and aluminum.
The latest tariffs are the result of a four-year review of Section 301 and in addition to those on over $300 billion worth of Chinese goods imposed during the Donald Trump administration.
Notably, a World Trade Organization panel found in September 2020 that the Section 301 tariffs contravened its regulations.
After China’s Ministry of Commerce vowed to take resolute measures to safeguard the rights and interests of Chinese companies, market watchers said that China has many options to counter Washington’s actions.
The US’ protectionist measures could reignite a “trade conflict “with China and damage the US economy in the process. Since tariffs essentially tax US businesses and consumers by raising the cost of imported goods, this could lead to inflation and harm job growth, said Wu Xinbo, dean of Fudan University’s Institute of International Studies.
In the short term, the US might seem aggressive in its efforts to target emerging Chinese industries, but this approach is unlikely to yield practical results in the long run, said Chen Bin, deputy director of the expert committee at the Beijingbased China Machinery Industry Federation.
Dismissing the “China overcapacity” narrative, He Yadong, a spokesman for the Ministry of Commerce, told a news conference that the socalled “overcapacity” perceived by some Western countries is not an excess of capacity but rather an excess of anxiety.
It shows worries of some countries about their own competitiveness and market share, which they use as a pretext to discredit and suppress China, said He.
Sun Xiaohong, secretary-general of auto branch of the Beijing-based China Chamber of Commerce for Import and Export of Machinery and Electronic Products, said that the share of Chinese EVs exported to the US is fairly small compared to other markets.
The number of Chinese EVs exported to the US sharply declined to fewer than 2,000 units in the first quarter of this year, cutting the US market’s share of China’s global EV exports to less than 0.5 percent, data from the General Administration of Customs showed.
With such a minimal export volume, the impact of US tariff increases on Chinese EVs is essentially negligible, said Sun.
“Tariffs are regressive taxes that are paid by US importers and US manufacturers and ultimately passed along to US consumers,” Steve Lamar, president and CEO of the American Apparel & Footwear Association, said in a statement. “At a time when hardworking American families are struggling with inflation, continued tariffs on consumer necessities are entirely unwelcome.”
“Over the last five years, US businesses and consumers have paid more than $215 billion in higher tariffs for a failed experiment in trade policy,” Blake Harden, vice-president of international trade for the Retail Industry Leaders Association, said in a statement.
“Broad-based tariffs are not strategic and will impede US economic growth — ultimately hamstringing American businesses trying to compete globally and negatively impacting the paycheck of American workers,” Harden said.
The tariffs are “unfortunate for American consumers, who are still feeling the pain of inflation eating into their annual household earnings”, Yael Ossowski, deputy director of the Consumer Choice Center, a nonpartisan advocacy group, told The Washington Times. “This is going
to add price inflation across the board all in the name of ‘tough guy’ electionyear politics.”
Ryan Hass at the Brookings Institution wrote last month that the trade war with China came at a heavy cost to the US economy, with job losses, and a regressive tax on consumers from higher import costs.
US Senator Chuck Grassley, an Iowa Republican, expressed concern on May 14 over the impact of tariffs on his Midwestern farming state, which is an exporter of agricultural products.
“I’m for free trade, because Iowa manufactures and does services, and does agriculture way beyond what we consume domestically, and we must be exporting,” Grassley told AgriTalk, a radio show and podcast. “I think that this is going to invite retaliation by China, and it’s possible retaliation could be (against) agriculture,” he said.
German Chancellor Olaf Scholz and Swedish Prime Minister Ulf Kristersson expressed reservations about possible European tariffs on Chinese EVs when asked, at a news conference in Stockholm on May 14, whether they support the European Union following suit.
“50 percent of electric car imports from China come from Western brands that produce cars there and, in that regard, that’s maybe a difference compared to North America. There is an exchange from both sides. European and even some North American manufacturers are successful on the Chinese market, and we have to take that into account,” said Scholz, stressing the importance of trade between the West and China.
“A broader trade war where we stop each other’s products is, in principle, not the future for large industrialized countries like Germany and Sweden,” Kristersson said.
German carmakers also signaled opposition to the possible tariff increases.
“The politicians are now calling for trade restrictions on Chinese car manufacturers. This is an absurdity,” BMW CEO Oliver Zipse told German newspaper Frankfurter Allgemeine Zeitung on May 14.
Regarding the EU’s anti-subsidy investigation on Chinese EVs, Hildegard Mueller, president of the German Association of the Automotive Industry, said new tariffs and barriers were not the right way forward.
“We believe that building up new tariffs and sliding into mutual protectionism is the wrong way to go,” Mueller said. “Rather, we need to talk to each other so that it is equally possible for companies in both countries to approach mutually, produce there and sell there.”
Jack Perry Jr, chairman of Britain’s 48 Group Club, which promotes equal and mutually beneficial trade between the United Kingdom and China, told China Daily he felt strongly over the US decision to impose tariffs on imports from China such as electric vehicles, solar panels, semiconductors and batteries.
“What they’re doing is trying to attack China and make themselves look good … They’re trying to point the finger at China, making their own economy worse, but really they should be looking at themselves,” Perry said.
“The American businesses are the ones that are going to suffer from this. American people will have to pay more for the retail price, and businesses will have to pay more for the wholesale prices … It’s not about building America better,” he said.
Referring to the “overcapacity” claim made by US Treasury Secretary Janet Yellen, Perry said it is “about positioning America against China, and don’t want China to be strong”.
“The US is talking about (Chinese products) flooding the market. That’s not true,” he said.
He said the 48 Group Club will continue to invest in the Chinese market. “Whenever there’s bad weather, there’s sun behind it. I believe business can bring the sun out,” he said.
Alena Douhan, the United Nations special rapporteur on the negative impact of unilateral coercive measures on the enjoyment of human rights, called on countries to lift all sanctions and other restrictions against China following a 12-day official visit to China.
Douhan said that currently the US entity list includes more than 700 Chinese entities.
“The unilateral sanctions against China do not conform with a broad number of international legal norms and are introduced to apply pressure on the state,” she said in Beijing on May 17.