US vs. China: Is there a threat of a trade war against Europe?

Berlin. The trade conflict between the US and China continues to escalate. The administration of US President Joe Biden announced on Tuesday that it will increase the existing import tariffs on Chinese electric cars in the future from the current 25 percent to 100 percent. Chinese-made electric vehicles would therefore be virtually unsellable in the US.

Electric cars are not the only product group that Americans are focusing on. The rates for solar cells and microchips will increase from the current 25 to 50 percent. Tariffs on steel and aluminum products, as well as on lithium-ion batteries and some electrical components, will increase by up to 25 percent. New rates of varying amounts will be introduced for medical devices. In addition, the import of harbor cranes will be taxed at 25 percent in the future.

According to the US government, imports totaling $18 billion will be affected by the new trade barriers.

The Biden administration is justifying this move with what it considers unfair trade practices by China. It was said that enormous overcapacity had been built up there with government support and that production was now flooding the world market. Domestic manufacturers would be at a disadvantage competing with artificially cheaper exports. The president will not allow Chinese manufacturers to further distort competition with unfair subsidies, according to Biden’s economic adviser Lael Brainard.

The allegations of dumping are not new. Biden’s predecessor Donald Trump had repeatedly complained about distortions of competition by China and raised the first tariffs. However, the World Trade Organization (WTO) considered this a violation of international trade rules.

China officially responds calmly

China officially reacted calmly to the US’s tougher approach. “The newly announced tariff increase is primarily a symbolic gesture through which the Biden administration is trying to appear tough on China amid the increasingly tough presidential election campaign,” China’s official Xinhua agency wrote on Tuesday after the US announced the rates had been announced.

Chinese state broadcaster CCTV spoke of “abuse of trade protectionist measures by the US”. It will seriously hinder the modernization of the American auto industry. Negative effects are also expected for consumers. Moreover, global efforts to combat climate change would be undermined.

China will “take all necessary measures to protect its legitimate rights and interests,” a State Department spokesperson said before the US measures were announced.

Beijing denies that its economic policies deliberately promote surpluses. “The so-called problem of Chinese overcapacity does not exist, neither from the perspective of comparative advantage nor in the light of global demand,” Chinese state and party leader Xi Jinping recently argued in France during his visit to Europe. Instead, China claims to be able to reduce global inflationary pressures and contribute to the fight against climate change.

Fear is growing in Europe

Following the Americans’ announcement, there is growing concern in Europe that products from China could now penetrate European markets even more than before. The European Commission has been investigating for some time whether Chinese exports of electric cars violate fair competition. Car expert Ferdinand Dudenhöffer expects that the US’s tougher course will have consequences for the ongoing procedures. “The EU will now follow this, because the French and Macron already have the argument ‘now the avalanche is rolling over Europe’ in their drawer,” Dudenhöffer told the editorial network Germany (RND).

The federal government and German business associations have so far rejected protectionist moves against China – not least out of concern about the Chinese response.

President of Foreign Trade Dirk Jandura called the US decision a “populist signal” in an increasingly heated election campaign. “We reject such measures because their effect is very questionable. This is especially true as Chinese countermeasures are to be expected,” Jandura told RND. “In the end, everything becomes more expensive and the losers are the market participants, consumers and companies.”

He advises against imitation by the EU, because the German car industry in particular would suffer, Jandura continued. “There is not a single car in the EU without parts from China. Our manufacturers also import their electric models from China. So we would be cutting ourselves in the flesh,” he said, shouting: “We have to accept the competition. And we must fight for a level playing field.”

The Association of the German Automobile Industry (VDA) also warned against further escalation. The US announcement is a further step away from global cooperation towards greater isolation, a spokeswoman said. “This measure increases the risk of a global trade conflict.”

Source link