Made in China anti-landing in the U.S. market: U.S. tariffs have triggered trade war clouds
1. The background and reasons for the US tariffs on China
Since 2018, a trade war has broken out between China and the United States, and the U.S. government has imposed tariffs on about $300 billion worth of Chinese imports on the grounds that China has engaged in unfair trade practices. Then-President Donald Trump's aim was to reduce the country's large trade deficit with China and limit China's development in key industries.
After the Biden administration took office, although it eased its hardline stance on trade policy with China, it finally decided to postpone the additional tariffs imposed on China during the Trump era. In 2022, the Office of the United States Trade Representative (USTR) initiated a review of these tariffs, which found that the tariffs were effective in promoting certain reforms in areas such as technology transfer, but the overall economic performance was "slightly negative."
In May 2024, the Biden administration announced new punitive tariffs on $18 billion worth of Chinese imports, including tariffs on electric vehicles from 25% to 100% and solar panels from 25% to 50%. The U.S. said the move was to protect U.S. workers and businesses from China's "unfair trade practices," accusing China of using large-scale subsidies and other non-market means to flood the global market with large quantities of cheap goods.
2. China responded strongly and threatened to take countermeasures
China expresses strong dissatisfaction and resolute opposition to this series of tariffs imposed by the United States. A spokesman for China's Ministry of Commerce pointed out that the unilateral imposition of tariffs by the United States violates the consensus reached by the two heads of state and will seriously affect bilateral economic and trade cooperation. China will take all necessary measures to defend its legitimate rights and interests.
China has always opposed the politicization of economic and trade issues by the United States as a weapon of pressure. The Chinese government believes that the U.S. side's hype of the so-called "China's overcapacity" is a typical protectionist approach, with the aim of restricting Chinese products from entering the U.S. market.
A number of foreign media reports also questioned that the reason for the United States to impose high tariffs on Chinese electric vehicles and other products is not sufficient. China's exports of electric vehicles to the U.S. are low, with Chinese solar panels exported less than 0.1 percent of total exports to the U.S. last year, and the tariffs have had a limited impact on China's industry, the data shows.
Third, the clouds of the Sino-US trade war are renewing and geopolitical tensions are intensifying
The Biden administration's announcement of tariffs on China comes at a noteworthy time, as it kicks off the 2024 U.S. presidential election. People believe that Biden is showing voters a tough stance on China through this move in order to gain political capital for re-election.
Such political calculations will undoubtedly further escalate geopolitical tensions between China and the United States. The Trump camp has blasted Biden's new tariff initiative as "weak", which heralds a new round of bipartisan contest on China policy.
Industry insiders are worried that a new round of confrontation between China and the United States in the field of trade may trigger a wider chain reaction and exacerbate the disruption of global supply chains. In recent years, the United States has been pushing for so-called "de-risking," calling on allies to reduce their dependence on Chinese industries.
But the latest research shows that while U.S. direct imports from China have declined, Chinese companies are setting up factories in Southeast Asia and other places to ship products to the U.S. indirectly. The true "decoupling" of U.S. supply chains is difficult, and instead makes them longer and more complex.
In order to achieve emission reduction targets, the demand for new energy products is still expanding. The contest between China and the United States in this area will further affect the general trend of the global energy transition.
Fourth, China's industry is facing domestic and foreign difficulties, and it is urgent to improve its competitiveness
For China's manufacturing industry, a new round of tariffs imposed by the United States will undoubtedly bring severe challenges. Chinese companies have to face a double blow from the United States: on the one hand, trade barriers are erected, and on the other hand, the United States vigorously supports related industries at home.
Taking the electric vehicle industry as an example, since 2023, in the context of the slowdown in the domestic market, many companies have had to maintain their operations by cutting prices and laying off employees. The United States, through policies such as the Inflation Reduction Act, is injecting a steady stream of financial support into the local electric vehicle industry.
In the face of domestic and foreign difficulties, Chinese enterprises urgently need to make greater efforts to improve product quality and innovation capabilities, and truly rely on strength to win a place in the international market, rather than relying on cheap comparative advantages.
The Chinese government also needs to carefully assess the situation and prevent excessive dependence on foreign countries while adhering to the principle of opening up to the outside world. Accelerating the modernization and upgrading of the industrial chain and cultivating independent and controllable core technologies will be the key to breaking the situation in China's manufacturing industry.
Five
The Biden administration's announcement of new tariffs on Chinese products in many sectors has triggered a new round of competition between China and the United States in the field of trade. The U.S. imposed high tariffs on the grounds of China's "unfair trade practices" to protect its own industries. China, on the other hand, firmly opposes it, accusing the US of being a typical protectionist approach and threatening to take countermeasures.
This decision undoubtedly exacerbates geopolitical tensions between China and the United States, and could also trigger a wider chain reaction that further disrupts the global supply chain order. While the U.S. has been calling for "de-risking" with its allies and reducing its dependence on China, the latest research shows that true "decoupling" of supply chains is difficult, making it longer and more complex.
For China's manufacturing industry, the double blow of trade barriers and domestic support policies from the United States will undoubtedly bring severe challenges. Chinese enterprises urgently need to improve product quality and innovation capabilities, and truly rely on their strength to win a place in the international market. The Chinese government also needs to accelerate the modernization and upgrading of the industrial chain, prevent excessive dependence on foreign countries, and cultivate independent and controllable core technologies.