"Terrible! This for China will hit all American families"

"Welcome to the Sarajevo event of the global green trade war." Under the pretext of China's so-called "unfair trade practices", U.S. President Joe Biden announced on May 14 local time that tariffs would be imposed on Chinese goods such as electric vehicles, the Wall Street Journal wrote in an editorial on the same day.

The Wall Street Journal said on the 14th that this move will definitely disrupt the supply chain of American companies and raise costs for American consumers and businesses. In fact, many foreign media reports mentioned that the above news was fiercely attacked by the US trade groups representing the interests of importers. Gov. Jared Polis, a Colorado Democrat, also said it was "terrible news" for American consumers.

According to US media analysis, Biden's latest "pivot" shows a core dynamic of current US trade policy, that is, the leaders of the two parties are competing to impose tough trade barriers on China in order to win more votes before the November election. But the Wall Street Journal warned that the "tariff bidding war" already provoked between Biden and his predecessor, Donald Trump, "will not end well for anyone."

"Tax increases will hit every household"

According to a report by the Wall Street Journal on the 14th, Blake Harden, vice president of international trade at the Association of Retail Leaders (RILA), said: "Widespread tariffs are not strategic and will hinder U.S. economic growth." This, he argued, would ultimately "create a hindrance to U.S. businesses that seek to compete globally and negatively impact the wages of U.S. workers."

Headquartered in Washington, RILA's association includes major chains such as Apple, Walmart, Target, Best Buy and Lloyd's Register.

David French, executive vice president of government relations at the National Retail Federation (NRF), also said: "At a time when consumers continue to fight inflation, the last thing this administration should do is to raise additional taxes on imports, which will be paid by U.S. importers and ultimately by U.S. consumers." According to the New York Times, the NRF represents a number of U.S. companies that source or sell Chinese products.

According to the White House, the U.S. tariff rate on Chinese electric vehicles will be adjusted from 25% to 100%, and the tariff rate on Chinese solar cells will be increased from 25% to 50%. Biden claims it's to protect U.S. manufacturing, but the Associated Press notes that fellow Democrat Colorado Gov. Jared Polis, a clean energy advocate, is not optimistic.

Speaking on social media platform X, Polis said that the tariffs on solar cells and other products were "terrible news for American consumers and a major setback for clean energy." "The tariffs are a regressive tax levied directly on Americans, and this tax increase will hit every household," he wrote. "The so-called regressive tax is that the richer you are, the less tax pressure you have. It is reported that more than 64,000 people in Colorado are employed in the clean energy industry.

According to the Wall Street Journal, the tariffs are aimed at curbing what China calls "overcapacity" and "dumping" clean energy products overseas, while the other is to trigger a reconfiguration of various supply chains, including more manufacturing in the United States and more nearshoring. But John Donigian, senior director of supply chain strategy at Moody's Analytics, warned that the higher new tariffs would "introduce additional risk and complexity into an already tight supply chain environment."

Although the Biden administration wants U.S. companies to shift their supply chains away from China, it has not provided enough incentives for U.S. companies, including trade agreements with other countries to ensure the stability of supply chains after the tariffs take effect, which has angered some industry groups. Beth Hughes, vice president of trade at the American Apparel and Footwear Association (AAFA), said: "Regrettably, the Biden administration has done little to negotiate new trade agreements or improve existing ones to make them more competitive. ”

The Americans have already paid $230 billion in tariffs

The Biden administration said on the 14th that the United States will impose additional tariffs on China on the basis of maintaining the Trump-era Section 301 tariffs. In addition to clean energy products, the Chinese goods that the United States imposed tariffs on this time also involve chips, steel and aluminum, medical products, etc., with a total scale of 18 billion US dollars. Statistics from the General Administration of Customs show that China's total exports to the United States in 2023 will be 500.291 billion US dollars.

The Tax Foundation, a conservative think tank in the United States, pointed out in an article on the 14th that although the Biden administration claims that compared with the original "Section 301" tariffs, the practice of raising taxes significantly in the aforementioned individual "strategic areas" is more strategic, but a closer look will find that the latest measures also have the same procedural, political and policy problems.

According to the article, many trade experts have pointed out that Section 301 does not give the executive branch the power to impose tariffs arbitrarily, and that the tariffs should be a measured response to the harm found in the investigation. The abuse of executive power to arbitrarily impose tariffs on "strategic goods" will only pave the way for more abuses of administrative tariff power in the future – such as Trump's proposed across-the-board tariffs of 10% or more, tariffs of 60% on all goods from China, and tariffs of 200% on cars from Mexico.

The article also said that Trump's initial tariff war with China not only failed to provide economic help to protected areas, but also caused job losses. An empirical analysis by the St. Louis Fed shows that in 2018-2019, the growth in employment and output in states in the United States that were more affected by tariffs was either smaller than that of other regions or negative. Economist David Autor found that instead of increasing employment in the industries that were meant to be protected by the tariffs, there was a "clear negative impact."

CNN said in March, citing U.S. Customs and Border Protection data, that U.S. consumers have paid more than $230 billion for imports to China such as solar panels, steel and aluminum since tariffs were imposed on Chinese imports during the Trump administration. According to the U.S. Tax Foundation, the tariffs cost the U.S. economy nearly 200,000 jobs and 0.25 percent of gross domestic product, or about $70 billion a year, according to the Tax Foundation.

In addition, a May 2023 study by the U.S. International Trade Commission (USITC), which estimated the impact of steel and aluminum tariffs on some of the affected industries, found that U.S. importers bore almost the full cost of the tariffs imposed on China during the Trump administration (and largely retained during the Biden administration). The USITC's report to the White House and Congress says that for every 1% increase in import duties on steel and aluminum products and Chinese goods, the prices of related goods in the U.S. market will rise by 1%.

Show toughness on China, US media: It will not end well for anyone

The New York Times quoted trade experts on the 14th as pointing out that the political agenda of the "imminent U.S. election season" is likely to be an important factor in the timing and scope of Biden's announcement of tariffs on China. Owen Tedford, senior research analyst at Lighthouse Policy Advisors, said in a note: "For Biden, the tariff statement is all about elections, as it will support his industrial policy agenda and further build his track record of being tough on China." ”

ABC said on the 15th that although the Biden administration will not admit this, the newly announced tariff policy represents a major shift for Biden - just in 2019, Biden also slammed the "Trump tariffs" and said: "Trump doesn't understand these basic truths, he thinks his tariffs are paid by China." Any first-year economics student can tell you that the American people are paying for his tariffs. ”

According to the analysis of the US media, this shows a core dynamic of the current US trade policy: the leaders of the two parties compete to impose tough trade barriers on China. Mr. Trump once single-handedly undermined bipartisan belief in free trade, but that action is now a deeply entrenched consensus. "As the gap between Biden and Trump shows, there are still differences, but free trade advocates are now clearly in the minority on both parties." Tedford said.

The Wall Street Journal said in an editorial on the 14th that economically, Biden's tariffs will definitely disrupt corporate supply chains, raise costs for American consumers and businesses, and may also incur "retaliation" against American goods; Politically, his hawkish rhetoric through tariffs is unlikely to work, as Trump will raise the tone further.

"The two candidates have already started a tariff bidding war, which will not end well for anyone." According to the Wall Street Journal, under the current tariff protection policy of the US government, the competitiveness of US car companies will decrease over time. "The way to defeat China economically is to make the United States more competitive, which means leveraging traditional strengths such as innovation, low taxes and regulations, and trade alliances, and Mr. Biden has done the opposite."

The Wall Street Journal also criticized the Biden administration's current policy as contradictory to its vision, hoping that everyone can buy electric vehicles on the one hand, and using tariffs to raise the price of imported electric vehicles on the other, which is simply "ridiculous". "Biden's tariff policy is a prime example of how a bad industrial policy can be stacked with another bad policy in the name of correcting mistakes." The article concludes.

In response to the U.S. increase in the 301 tariffs imposed on some Chinese products, a spokesman for the Ministry of Commerce of China responded on the 14th that the United States abused the 301 tariff review procedure for domestic political considerations to further increase the 301 tariffs imposed on some Chinese products, politicizing and instrumentalizing economic and trade issues, which is a typical political manipulation, and China expresses strong dissatisfaction with this. The WTO has long ruled that Section 301 tariffs violate WTO rules. Instead of correcting them, the US side has insisted on going its own way and making mistakes again and again.

The spokesperson stressed that the US raising Section 301 tariffs violates President Biden's commitment to "not seek to suppress and contain China's development" and "not seek to decouple and break the chain with China", and is also inconsistent with the spirit of the consensus reached by the two heads of state, which will seriously affect the atmosphere of bilateral cooperation. The US should immediately correct its wrong approach and lift the additional tariffs imposed on China. China will take resolute measures to defend its rights and interests.

Source | Observer.com