The United States took another step to end an era of “free trade” with China, by increasing tariffs on imports of “green” technology and other products. This includes a 100% tax on electric cars.
The White House stated that the tariffs are necessary to protect American manufacturers in key areas from being harmed by dumping of Chinese competitors who receive subsidies.
Tariffs on electric cars, which have become a major front in the international trade wars will be quadrupled from 25%. The European Union may take its own actions against China.
Tariffs for semiconductors are set to double, to 50%. Those on lithium-ion battery and battery components will also increase from 7.5% to 25%.
The tariffs will also be higher on port cranes, steel and aluminum products, medical equipment, including syringes and needles, and certain types of personal protective gear.
The White House stated that “China’s unfair practices in technology transfer, intellectual properties and innovation threaten American businesses and workers.” “China also floods global markets with artificially-low-priced products.”
China’s 2001 entry into the World Trade Organisation has accelerated a manufacturing shift from the West to the East. But it was Donald Trump’s election as president that prompted the United States to begin imposing tariffs on all products in 2018. This process had been started by the Biden Administration.
White House said the tariff increases, which would begin in 90 days and be implemented over a period of two years, are targeted at the areas that benefit from the “Investing In America” program.
The rapid growth in China’s production of electric vehicles has alarmed both the United States as well as the EU. In the last quarter of 2010, Shenzhen’s BYD surpassed Tesla to become the world leader in electric vehicle sales. The basic model is sold in China at around £8,000 compared to the price of a Tesla car in Britain, which is just under £40,000. Chinese manufacturers enjoy cheap land provided by local governments, low-cost loans from state banks and cheaper electricity.
The European Commission launched an investigation into whether BYD or other Chinese players are benefiting from unfair practices. The European Commission will face even greater pressure to act now amid fears of China’s excess production capacity being redirected. So far, Britain has not followed suit.
The advisers to President Biden say that the tariffs only affect a specific group of industries where imports were only worth $18 billion last year, as opposed to the tariffs, which Trump had imposed, and affected two-thirds of China’s imports. Trump, Republican candidate for this year’s election, has also threatened to increase taxes on Chinese goods to 60% or more if he wins the White House.
President Biden decided to take action against Chinese trade in order to protect American businesses
David Oxley is the chief climate and commodities analyst at Capital Economics. He said that the impact of US tariffs announced on today’s news will be minimal for the small amount of solar panels and electrical vehicles that China exports directly to the US. The new tariffs may have a greater impact on the imports of Chinese batteries. They will be less competitive.
The White House claims that Trump’s tariffs, which are indiscriminate in nature, could hurt consumers by increasing prices and harming global trade. The White House also claimed that Trump’s tariffs had failed to boost American production, as compared to Biden’s combination of targeted tariffs with investment.
Officials said that China’s increasing dominance on the market, achieved through protectionist policies and forced technology transfers, as well as uncompetitive business practices and excessive capacity, cannot be tolerated.
China has reacted with anger and has promised to retaliate. Wang Wenbin said that China will continue to oppose unilateral tariffs, which violate WTO rules, and take all measures necessary to protect its legitimate rights.
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