On May 14, the Biden administration announced that it would further increase tariffs on electric vehicles, lithium batteries, photovoltaic cells, semiconductors and other products imported from China, of which the tariffs on electric vehicles will increase from 25% to 100%.
At the same time, U.S. Treasury Secretary Janet Yellen said she would continue to blame China on the so-called overcapacity theory of the U.S. side.
In response, the Ministry of Foreign Affairs of the mainland responded strongly, saying: "China will take all necessary measures to defend its rights and interests." ”
So, what do you think about the ins and outs of this matter?
1. The United States imposes new tariffs on China
On May 14, the White House announced that it would impose additional tariffs on a range of goods from China, including electric vehicles, lithium batteries, photovoltaic cells, semiconductors, and medical supplies, on the basis of the original Section 301 tariffs.
Judging from the notice issued by the White House, the tariffs are concentrated in seven industries, involving Chinese products worth about $18 billion.
Among them, the tax rate on electric vehicles in China will increase the most, from 25% to 100%; Tariffs on solar cells and semiconductors will be increased from 25% to 50%; Other industries are not equal.
In recent years, it has been common for the United States to impose tariffs on Chinese products, but it is still shocking that it has developed to such a "madness".
During the Trump era, the United States launched a "Section 301 investigation" against China and imposed tariffs.
The so-called "Section 301 tariff" refers to the right of the President of the United States to unilaterally impose tariffs or other trade restrictions in order to protect his industry from "unfair trade practices" of other countries under Section 301 of the Trade Act of 1974.
There is a view that the starting point of Biden's move is to "build momentum" for the presidential election, and the symbolic significance is greater than the practical significance.
During the election campaign, former U.S. President and Biden's "opponent" Trump also released a negative signal on Sino-US trade, and even proposed to impose a 10% "basic tariff" on most countries around the world.
This point of view seems somewhat "outrageous" to us, but in the United States, at least in the confrontation with Biden, he still has some support.
As of May 9, five of the six swing states had higher approval ratings for Trump than Biden, according to multiple agencies.
Against this backdrop, Biden had to find ways to leverage the votes.
In fact, most of the Tariffs imposed by the Biden administration on Chinese products will not be implemented until 2025 or 2026, and the tendency to "build momentum" is more obvious.
But even so, once the document is passed, it will inevitably be a hidden danger, and Biden's move will inevitably have a negative impact on China-US economic and trade relations and the industrial development of the two countries.
2. The "absurd" request of the US Treasury Secretary
At the same time as Biden imposed tariffs on China, US Treasury Secretary Janet Yellen's statement was also infuriating.
Yellen said that she expected China to implement countermeasures, but still defended that the US approach was precise, let alone the idea of "cutting in two" with China.
However, having said that, under the banner of "overcapacity", there is still no room for smearing China.
"The U.S. will be very clear about subsidizing investments in strategic areas, but we don't want China to provide massive subsidies to companies with significant overcapacity, which will only squeeze our companies out of the market," she cheekily said. ”
Isn't this kind of statement the old saying "only the governor is allowed to set fires, and the people are not allowed to light lamps?" ”
In the eyes of the United States, U.S. subsidies are industrial investment and protection of national security and industrial development. Subsidies by other countries undermine the free market and unfair competition.
In the final analysis, the United States is suppressing the industries of other countries, trampling on the market economy, and reflecting their consistent "hegemonic" thinking.
Naturally, China will not accede to the unreasonable demands of the United States. As a matter of fact, there is strong opposition to the "absurd" act of the United States in Western countries and even within the United States......
3. Responses from China and other countries
In response to the Biden administration's decision to impose tariffs on Chinese products, both the mainland's Ministry of Commerce and the Ministry of Foreign Affairs responded.
A spokesperson for the Ministry of Commerce said: "China firmly opposes it and makes solemn representations. ”
First of all, this move by the US side is a "typical political manipulation", which once again politicizes and instrumentalizes economic and trade issues, and takes political considerations as the starting point of economic measures, which is inappropriate.
Second, the "Section 301 tariffs" violate WTO rules, and the WTO has already made a ruling, and instead of repenting, the US side has insisted on going its own way, which is trampling on international trade rules.
Thirdly, both Biden and Blinken have repeatedly publicly promised that they will "not seek to suppress and contain China's development" and "not seek to decouple from China", which undoubtedly proves once again that the US side is inconsistent with its words and deeds.
Finally, the Chinese side demands that the US side immediately correct its wrong practice and cancel the additional tariffs imposed on China.
Foreign Ministry spokesman Wang Wenbin responded on the 15th, saying: "China will take all necessary measures to defend its rights and interests." ”
First of all, if the US imposes further tariffs on Chinese products, the cost of imported goods will inevitably increase significantly, and US companies and consumers will have to pay a greater price for them.
Second, this move by the US is a typical "protectionism", which will greatly undermine the security and stability of the global production and supply chain, and may cause harm to global trade.
Finally, China urges the US to immediately lift the additional tariffs imposed on China, and China will take all necessary measures to defend its rights and interests.
On the same day, the spokesperson of the mainland embassy in the United States also said that the US move was a manifestation of "taking the lead in violating the rules" and could not win the trust of the international community.
The U.S. crackdown on China's industry does not prove that the United States is strong, but reflects the lack of self-confidence in the United States. China's development will not stop there, and external pressure will only inspire the Chinese people to work harder.
While the Chinese side expressed its solemn opposition, the Western camp also expressed dissatisfaction with the US approach.
Swedish Prime Minister Kristersson said: "Destroying global trade is an absolutely bad idea, and we oppose it as much as possible." ”
German Chancellor Olaf Scholz said: "The European market is very closely linked to China, and European manufacturers and some American manufacturers are very successful in the Chinese market and also sell a large number of cars produced in Europe to China." ”
Griffin, the founder of an American investment group, criticized Biden, saying: "This is another manifestation of the illogic of the Biden administration's economic policy." ”
He pointed out that the Biden administration's vigorous development of green energy while imposing huge tariffs on high-quality and low-cost electric vehicles from China is simply contrary to the zero-carbon goal.
Harden, vice president of the American Association of Retail Leaders, hit the nail on the head: "The Biden administration's decision is deeply disappointing and an insult to American businesses and consumers. ”
She argues that the cost of widespread tariffs will ultimately be paid by U.S. businesses and consumers, not China, which will hinder the U.S. economy.
Colorado Governor Polis also said: "This is terrible news for American consumers. ”
According to the U.S. Tax Foundation, the tariffs imposed by the U.S. on Chinese products cost the U.S. nearly 200,000 jobs a year and about $70 billion in annual output.
Under the "offensive" of the US side, who will lose more in China and the United States? The answer may not be what US politicians expect.
Fourth, where do Chinese car companies go?
The U.S. plans to raise the tax rate on China's imported electric vehicles to 100%, which is actually an attempt to drive Chinese electric vehicles out of the U.S. market and "make room" for its own products.
But for now, the U.S. lags behind China in terms of related industrial chains. The focus of U.S. companies is on AI technology, and the market size is limited, and the supply and demand sides may not fit perfectly.
If the basic industry is divided into countries such as India and the Philippines, their level in the industrial chain may not be able to catch up with China.
On the other hand, most of the major direct exporters in the industries sanctioned by the United States are not the United States, and the overall proportion is still showing a downward trend.
A big reason is that the "Belt and Road" has given us more support, so that the mainland has greater confidence in the issue of exports.
Therefore, when the US points the finger at China, it needs to consider the gains and losses of its own industry.
Not long ago, Tesla CEO Elon Musk visited China and showed a very friendly attitude towards China, which made Tesla's stock price soar, which is enough to see the influence of the Chinese market.
Recently, Tesla proposed to land "driverless taxis" in China, and the intention of "entering China" is obvious.
At this time, the United States suppressed China's electric vehicle industry, and the atmosphere of friendly cooperation was broken, and Tesla may also have a hard time.
So, in the midst of the changes, where should mainland car companies go?
According to the Securities Times, from January to April 2024, China's automobile exports reached 1.878 million units, a year-on-year increase of 26%, and one of the main reasons behind it was the pull of new energy vehicles.
The huge tariffs imposed by the United States on electric vehicles on the mainland will aggravate trade barriers to a certain extent, and the idea of "going out" will inevitably be hit.
It is worth mentioning that the United States is not the only country or international organization to suppress Chinese electric vehicles.
As early as last year, the European Union launched a countervailing investigation into Chinese electric vehicles, intending to hinder their access to the European market.
However, in the current US tariff hike, the attitude of Germany and Sweden has eased, which to a certain extent reflects the position of the European Union.
Therefore, despite the intensification of risks, overseas markets are not unbreakable, and the road of "going global" is still worth sticking to.
If you can't do it, you can consider combining with the local industry, taking the initiative to localize, and then improve the competitiveness of the product.
All in all, in the face of malicious suppression by external forces, we uphold the principle of working hard, and at the same time believe in the country and safeguard national interests.
Resources:
Will China impose new tariffs on U.S. products? The Ministry of Foreign Affairs responded
CITIC Securities: The U.S. tariffs on China are more effective than they are, and they are intended to be campaigned
The United States announced additional tariffs on China's electric vehicles, and the Ministry of Foreign Affairs and the Ministry of Commerce responded
The United States abuses protectionism to impose tariffs on China, and American companies and consumers "lie down"
Yellen mentioned "China's overcapacity" again, and the Ministry of Foreign Affairs: only state officials are allowed to set fires, and people are not allowed to light lamps