After a series of upfront hype, the Biden administration announced new tariffs on $18 billion worth of Chinese exports to the United States to protect American workers and businesses from what is known as "China's overcapacity." According to the Observer, citing a number of foreign media released on the 14th, the United States announced tariffs on electric vehicles, semiconductor chips, medical products, lithium batteries, critical minerals, steel and aluminum, port cranes, personal protective equipment, photovoltaic cells and other products. As soon as the news came out, there were many complaints in the United States, and Colorado Governor Pais said that this tax increase would hit every family. U.S. Treasury Secretary Janet Yellen said she hoped China would respond in a "rational way."
It is reported that this combination will be implemented in phases in the next three years, and the most tariff pressure is the electric vehicle that is in the limelight, which jumped directly from 25% to 100, lithium battery is from the previous 7.5% to 25%, photovoltaic panels soared to 50%, port cranes rose from the previous zero tariff to 25%, and medical products rose from zero to 50%. In the face of the Biden administration's new tariff offensive, the mainland quickly responded.
In response to the US 301 tariffs imposed on China, the spokesperson of the Ministry of Commerce clearly pointed out that the abuse of Section 301 tariffs by the US due to domestic political considerations is a typical political manipulation, and China strongly disagrees with this, and that the decision violates President Biden's commitment to "not seek to suppress and contain China's development", and China will take resolute measures to defend its rights and interests. For such an outcome, we can look at it from two angles. At the micro level, China must push back against America's attempt to break global trade rules. This is not only a blatant suppression of China's economic development and a push for "decoupling and breaking the chain", but also a direct manifestation of US economic hegemony. Whether it is based on its own interests or to maintain the international trade order, it is necessary for China to make tough countermeasures, otherwise conniving at such hegemony and bullying is a disguised encouragement of extreme anti-China forces in the United States.
But from a macro perspective, China has not been greatly affected in this round of tariff war, because the Biden administration's tariffs are purely out of vote considerations, which makes the new tariff policy full of loopholes. Taking the "new three things" as an example, lithium batteries have been subject to a 25% tariff this time, and the magnitude of the increase is expected to be lower, and the core supply of natural graphite has been mastered by the mainland, and it will not be added until 2026.
The increase in the levy on electric vehicles is the largest, but the problem is that the United States is not the target market for Chinese car companies, and in fact, the export of mainland electric vehicles to the United States in 2023 will only be more than 10,000 units, which is difficult to see as negative. As for photovoltaic cells, the symbolic significance is greater than the practical significance, because most of the photovoltaic products exported to the United States are from Southeast Asian production capacity. It should be pointed out that the great power game has always focused on "one blow must be hit", when the Biden administration spent several years to review, and it was aimed at a single country to create tariff barriers, showing a state of leakage, which can neither achieve the "revitalization of American manufacturing", nor can it curb China's industrial upgrading, and even cannot protect the effect of domestic industry. The only role is to give Biden the capital to "ask for credit" from voters.
Having said that, China still needs to be vigilant enough, because the political polarization caused by the vicious bipartisan fighting in the United States has become the worst part of the current political ecology in the United States. Biden was able to call for a 100% tariff on Chinese electric vehicles, but there is no guarantee that Trump, as a sworn enemy, will not promise to impose 200% tariffs, and in fact Trump has expressed a similar view.
He declared on May 15 that "the Biden administration must do the same on other Chinese vehicles because 'China is eating our lunch right now.'" They have to do it outside of electric vehicles. "In this regard, we have reason to believe that after the past few years of direct confrontation with the United States, even if China's industrial upgrading will face many dangers and obstacles, as long as China can persistently lay a solid foundation, focus on the vast market of developing countries, embrace the world and competition with a more open attitude, and break through the hegemonic encirclement, it is only a matter of time.