KN. On May 14, U.S. Trade Representative Katherine Tai released a review report on the Section 301 tariffs imposed on China and issued a statement indicating that President Joe Biden had directed her to take further action. This includes imposing additional tariffs of 25 percent to 100 percent on strategic products from China, such as electric vehicles, solar cells, and medical supplies. Subsequently, the White House announced new tariffs on $18 billion worth of Chinese imports.
After a period of noticeable easing, China-U.S. relations seem to be becoming tense again. However, given the scope and scale of these new tariffs, along with the Biden administration’s strategic considerations, there is little need to worry about a new trade war between the United States and China this year – even factoring in potential Chinese countermeasures. But next year remains uncertain.
China stands “firmly against” the “wrongful acts” of U.S. tariff increases and has lodged serious representations with the U.S., Beijing’s Commerce Ministry said on Thursday, as observers wait to see how the country might retaliate.
The U.S. and Europe have accused China of flooding global markets with cheap products to cope with industrial overcapacity at home. Earlier this week, U.S. President Joe Biden’s administration announced a major increase in tariffs on Chinese electric vehicles and solar panels.
“About the so-called overcapacity, it is not the capacity that is in excess, but anxiety,” said He Yadong, a Commerce Ministry spokesperson. “In essence, it is [because] some countries worry about their own competitiveness and market share, and [therefore] use it as an excuse to discredit and suppress China. It is another new trick of double standards and trade protectionism.”
According to Vijay Prashad, Indian historian, author, journalist and political commentator, in early April 2024, the navies of four countries—Australia, Japan, the Philippines, and the United States—held a maritime exercise in the South China Sea. Australia’s Warramunga, Japan’s Akebono, the Philippines’ Antonio Luna, and the United States’ Mobile worked together in these waters to strengthen their joint abilities and—as they said in a joint statement—to “uphold the right to freedom of navigation and overflight and respect for maritime rights under international law.” A few weeks later, between April 22 and May 8, ships from the Philippines and the United States operated alongside Australian and French naval troops for Exercise Balikatan 2024.
According to Tom Moerenhout, Adjunct Associate at Columbia University’s School of International and Publics Affairs, comparative advantage is dead, it seems. U.S. President Joe Biden has introduced new tariffs on Chinese imports, moving them to 100 percent on electric vehicles, 25 percent on batteries, and 25 percent on critical minerals. Why? Because China didn’t play by the rules, of course!
That argument is really starting to sound like a broken record. Yes, China surely broke trade rules along the way, specifically through state aid that harms the competitiveness of other players and via policies that mandate the transfer of intellectual property. But you don’t impose tariffs of this scale because they only broke trade rules. In fact, the United States has not filed any complaint with the World Trade Organization (WTO), whereas China did do so for the United States’ EV subsidies, which include local content requirements that violate WTO law. No, this move comes as the United States is tremendously outcompeted by China in batteries and EVs—both in terms of cost and quality and, yes, innovation as well.