This is a sports car photographed at Ford's booth in the auto exhibition area of the 6th CIIE on November 6, 2023. Photo by Xinhua News Agency reporter Meng Tao
On May 14, the United States announced that it would increase tariffs on electric vehicles, lithium batteries, photovoltaic cells, critical minerals, semiconductors, steel and aluminum, port cranes, personal protective equipment and other products in China. Among them, the tariff on electric vehicles will be raised from 25% to 100%.
From some politicians hyping up the "theory of China's overcapacity" to imposing tariffs in spite of China's strong opposition, the United States has chosen to make more mistakes than mistakes.
The United States abuses protectionism and imposes tariffs on China
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%.
U.S. experts believe that this move is for domestic political purposes, will not help the prosperity of related industries in the United States, is not conducive to the United States' efforts to combat climate change, and this market-distorting behavior will hurt American consumers.
This is U.S. President Joe Biden photographed in Washington, D.C., on May 14. Xinhua News Agency (photo by Aaron)
On the same day, China's Ministry of Commerce responded to the US increase in the Section 301 tariffs imposed on some Chinese products, saying that the United States abused the Section 301 tariff review procedure to further increase the Section 301 tariffs imposed on some Chinese products, and politicized and instrumentalized economic and trade issues, 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 of China stressed that the US 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.
Can the US raise the tariff stick make a difference?
In response to the new tariff plan of the United States, Reuters, the Associated Press and many other foreign media have analyzed that the impact of the plan on China is limited, because there are very few electric vehicles from China in the US market, and for the United States, the political motivation is greater than the actual impact.
At the Celis Automobile Gigafactory in Liangjiang New District, Chongqing, the AI intelligent detection system detects the tightness of bolts in key parts of the vehicle (photo taken on April 25). Photo by Xinhua News Agency reporter Huang Wei
Due to restrictions, China's electric vehicles, lithium batteries, and chips have not entered the U.S. market on a large scale before. According to the data, electric vehicles, medical supplies and semiconductor products currently account for only 5.9% of China's total exports to the United States, less than 1% of China's total exports. In 2023, China will export just over 10,000 electric vehicles to the United States, accounting for less than 1% of total exports. In the first quarter of this year, China exported less than 2,000 electric vehicles to the United States.
Based on this, the Nihon Keizai Shimbun pointed out that China's related industries do not depend on the U.S. market, and it is difficult for the U.S. to have a substantial impact on Chinese companies with additional tariffs. Bloomberg also analyzed that the US government's targeting of China's green technology sector seems to be fierce but is actually only symbolic, and "will hardly weaken China's economic growth".
Why, then, is the U.S. government doing this? Analysts pointed out that on the one hand, because the United States cannot compete with China in the field of new energy, US politicians have no choice but to resort to trade protection measures to suppress the development of China's advantageous industries, seek a more favorable competitive environment for their own enterprises, and maintain the high-end position of the United States in the global industrial chain.
On the other hand, it's more like a "political show". This year is an election year in the United States, but the US economy is mired in multiple predicaments such as high inflation and high fiscal deficits. As many analysts have pointed out, the Biden administration's "tariff war" against China at this time is mainly due to domestic political needs, with the aim of showing toughness against China on economic issues that voters in swing states care about to win more votes.
Raise taxes, a "boomerang"-style self-injury game
Now, the United States has imposed tariffs on China's advantageous industries, which will only bring backlash. Bloomberg columnist David Ficklin points out that, like birds on an island, these automakers can become bloated and lose the ability to fly without competitors.
The United States may hope to use tariffs to suppress China's new energy industry advantage, but this is only wishful thinking. China's new energy products sell well all over the world, related investment is widely welcomed, with the comparative advantage of technology and price, China's new energy vehicle exports in the global market is still out of the upward curve. According to the statistics of Rhodium Consulting, Europe will once again become the largest destination for China's outward FDI in electric vehicle-related industries in 2023. In Brazil, Chinese automakers sold 48,000 new cars in the first four months of the year, eight times more than in the same period last year. At the same time, Brazil is trying to attract the Chinese automotive industry to the market in order to create a wide range of jobs. It can be seen that the development of China's new energy industry has benefited the world, and it is the general trend to participate in win-win cooperation.
On December 22, 2023, at Tesla's Shanghai Gigafactory, workers inspect the paint, doors and windows of vehicles before leaving the factory. Photo by Xinhua News Agency reporter Fang Zhe
"Is it possible that we were only defeated by China in these areas?" Recently, an American radio program host issued a "soul torture" to US Treasury Secretary Janet Yellen. Hearing Yellen's "standard answer" that "Chinese companies have received a large amount of government subsidies, resulting in an unfair competitive environment", and the host questioned the United States' "possibility of providing more subsidies" with the US CHIPS Act and the Inflation Reduction Act as examples, Yellen had to admit that the US government provides subsidies in important strategic areas such as clean energy, because this is crucial "strategic" for the United States.
Regarding Yellen's "double standard", Hua Chunying, assistant foreign minister of China, said on social media: "Translation: We will use subsidies to support American industry because it is strategic, but when others do it, it is unfair competition." ”
It turns out that the protectionist measures of the United States, without exception, are just a "boomerang"-style game of self-harm. The U.S. media published articles saying that the tariffs are actually a tax on American consumers, and almost no one thinks that the tariffs are effective, but they cost the U.S. economy the cost of losing money and jobs. 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.
No amount of high tariffs will protect the U.S. auto industry
Can High Tariffs and Trade Barriers Really Protect the U.S. Auto Industry? To put it another way, the U.S. steel industry is a lesson in point.
The picture shows new energy vehicles queuing up for loading. (Drone photo) Photo by Wang Shuo from China News Service
As early as 2017, the United States implemented the "double reversal" of stainless steel products in China, at that time, China's steel exports to the United States were insignificant, and the crux of the American steel industry was not the so-called "unfair competition", nor the lack of adequate protection, but its monopoly position for many years, and did not pay attention to relying on technological progress to improve production efficiency.
What the U.S. steel industry really needs is to promote reform through opening-up, and trade protection will only increase corporate inertia. Sure enough, at the end of last year, U.S. Steel, a giant that had supplied steel to the Empire State Building in New York, agreed to accept a takeover from a Japanese company.
Now, did protectionism protect the U.S. steel industry, or did it turn into a political bubble? Experts point out that the U.S. steel industry today may be the U.S. auto industry tomorrow.
Synthesized from Chinanews.com, Xinhuanet, CCTV news client, Economic Daily, etc