The United States raises tariffs on Chinese electric vehicles, who suffers? Who benefits?

The country is a through train

2024-05-15 15:44Published on the official account of China News Service "The Country is a Through Train" in Beijing

Text/Li Xiaoyu

The United States recently announced that it will further increase tariffs on electric vehicles, lithium batteries, photovoltaic cells and other products imported from China. Analysts here believe that the United States' intention to suppress China's relevant industries is obvious, and it will cause damage to Sino-US economic and trade cooperation.

"Stumbling up" in the back

On May 14, the U.S. released the results of the four-year review of the additional Section 301 tariffs imposed on China, announcing that it would further increase tariffs on electric vehicles, lithium batteries, photovoltaic cells, critical minerals, semiconductors, steel and aluminum, port cranes, personal protective equipment and other products imported from China on the basis of the original Section 301 tariffs on China.

Among them, the tariff on electric vehicles will be increased from the current 25% to 100%.

Cui Fan, a professor at the University of International Business and Economics, said that the Biden administration's increase in tariffs this time is not only for the purpose of creating a tough image in the presidential campaign and competing with rival Trump for voters, but also for the consideration of further suppressing China's new energy industry and competing for international market share.

At present, the development of China's new energy industry is in the limelight. According to Chinese statistics, the production and sales of new energy vehicles in China will increase by 35.8% and 37.9% year-on-year in 2023, respectively.

The technology, performance and quality of products in related fields have also been widely recognized by the international market. Taking the battery, a key component of new energy vehicles, as an example, from liquid lithium batteries to semi-solid-state lithium batteries, from Kirin batteries with a range of 1,000 kilometers on a single charge, to 800-volt high-voltage silicon carbide platforms with a range of 400 kilometers in 5 minutes, China's core battery technology has continued to make breakthroughs, with longer mileage and faster charging speed.

Cui Fan believes that the 301 tariffs imposed by the United States this time are actually a continuation of the 301 tariffs imposed on China since July 2018, along the Chinese new energy industry chain, from downstream to upstream step by step: first forcing enterprises to move production links out of China, and then forcing them to invest or transfer technology to the United States.

Chen Wenling, chief economist of the China Center for International Economic Exchanges, also said that the topic of the new energy industry has been politicized and instrumentalized. The United States has raised tariffs to suppress China's new energy industry, intending to buy time for its own industrial transformation and transcendence.

Suffering?

The United States has raised tariffs on Chinese electric vehicles, lithium batteries and other products, and many people have suffered.

First and foremost is the economic and trade relations between China and the United States. In Cui Fan's view, the US tariffs have set up a huge obstacle for China's electric vehicles and photovoltaic products to be exported directly to the United States.

It is worth noting that the United States has previously launched a "double anti-dumping" investigation process against Vietnam, Cambodia, Malaysia and Thailand. Cui Fan said that the road for Chinese enterprises to invest overseas and export intermediate goods may also be affected as a result. The United States is pressing the containment step by step along the industrial chain, and the medium and long-term impact on China's new energy industry needs to be closely monitored.

A spokesperson for China's Ministry of Commerce pointed out that the US abused the Section 301 tariff review procedure to further increase the Section 301 tariffs imposed on some Chinese products out of domestic political considerations, which is a typical political manipulation. The US raising Section 301 tariffs violates President Biden's commitment not to seek to suppress and contain China's development, "not to seek decoupling and breaking the chain with China", and is not in line with the spirit of the consensus reached by the two heads of state, which will seriously affect the atmosphere of bilateral cooperation.

As a result, global cooperation on climate change will also be hampered. According to the Ministry of Commerce, blocking China's free trade in green products will not help solve its own problems, but will undermine global cooperation on climate change and hinder the global green transition. If we talk about climate change cooperation, we cannot engage in protectionism, and if we engage in protectionism, there can be no real climate change cooperation.

The spokesperson of the Ministry of Commerce stressed that the US side should immediately correct its wrong practice and cancel the additional tariffs imposed on China. China will take resolute measures to defend its rights and interests.

Who benefits?

By raising tariffs to suppress China's new energy industry, can the U.S. industry develop? The answer is no.

China's new energy vehicles are selling well in the world, and there is a solid foundation behind them. In addition to technological innovation, in terms of production and supply chain, Chinese enterprises have gradually gathered in practice to form an efficient and complete production and supply chain, and new energy vehicle manufacturers in the Yangtze River Delta region can solve the supply of required supporting parts within 4 hours' drive, with a "4-hour production and supply circle"; In terms of market ecology, China's market is huge and competitive, and those who can stand out in the big waves are the strongest.

When attending the 2024 Global Trade and Investment Promotion Summit recently, the heads of a number of chambers of commerce said that China's new energy vehicles have obvious advantages in terms of technology and scale cost, and product quality is also improving.

In other words, if the relevant industries in the United States want to catch up, they must also fight for technology, innovation, and production and supply chains.

As the Ministry of Commerce has said, engaging in trade protection will only backfire if it fails to achieve the desired results. By "labeling" and "buttoning the hat", setting restrictions on China's product exports and investment cooperation will not stop China's pace of progress, but will stumble over itself.

Source: The country is a through train

Editor: Qin Jing

Editor-in-charge: Wei Xi

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