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Beijing vows retaliation against Biden's hikes of tariffs on Chinese imports

Asia
 A worker wipes an Ora, a Chinese electric car, during the Auto Shanghai 2023 show at a convention center in Shanghai, on April 18, 2023. [AP Photo]

Chinese officials angrily promised retaliation after the announcement by the White House on Tuesday that the Biden administration would be increasing tariffs on certain imports from China, including a quadrupling of the surcharge on electric cars to 100 per cent.

“This will seriously affect the atmosphere of bilateral cooperation,” the Ministry of Commerce said in a statement on Tuesday. “The United States should immediately correct its wrongdoing and cancel the additional tariffs imposed on China. China will take resolute measures to defend its rights and interests.”

Speaking to reporters Wednesday, Chinese Foreign Minister Wang Yi said, “Some people in the U.S. have lost their sanity in order to safeguard their unilateral hegemony,” according to Bloomberg.

He added, “[A]t this crucial moment of the economic recovery, the global community should tell the U.S. to stop creating new troubles.”

China accused of ‘cheating’

The White House announcement Tuesday came at the conclusion of a statutory review of tariffs, which occurs every four years.

In remarks at the White House, President Joe Biden said the review had found that the existing regime of tariffs had been helpful but insufficient when it came to forcing China to scale back what he described as unfair trade practices, such as government subsidies and other preferential treatment of domestic manufacturing.

Biden accused the Chinese government of “cheating” when it competes with other nations in international trade.

“For years, the Chinese government has poured state money into Chinese companies across a whole range of industries: steel and aluminum, semiconductors, electric vehicles, solar panels - the industries of the future - and even critical health equipment, like gloves and masks,” he said.

“China heavily subsidized all these products,  pushing Chinese companies to produce far more than the rest of the world can absorb,” Biden said. “And then dumping the excess products onto the market at unfairly low prices, driving other manufacturers around the world out of business.”

Targeted tariffs

Biden announced that existing tariffs, many put in place during the administration of former President Donald Trump, would remain in place and that additional tariffs would target specific products and industries.

In addition to the 100% tariff on electric vehicles, the administration is planning new levies on electric vehicle batteries, certain kinds of semiconductors, solar cells, and equipment used in the healthcare industry, including face masks, medical gloves, syringes and needles.

The announcement also included notice that a process will be put in place through which U.S. importers can request that tariffs be waived for specific machinery used in domestic manufacturing operations.

Chinese response unclear

Experts said there are a number of ways in which China might elect to respond to the newly announced tariffs, with some of the most likely being imposing tit-for-tat tariffs on American goods entering China; cutting its own purchases of politically sensitive U.S. agricultural products, such as soybeans; or restricting the sale of mineral products vital to the manufacture of EV batteries.

In a discussion hosted by the Peterson Institute for International Economics on Wednesday, Tu Xinquan, dean of the China Institute for WTO Studies at the University of International Business and Economics in Beijing, said retaliation by China was inevitable, though it might be measured.

“The Chinese government needs to do something to show its opposition to the U.S. action,” he said. However, he pointed out that the actual impact of the new sanctions on the Chinese economy would be relatively small.

“Maybe the reaction will not be so dramatic,” Tu said.

Commensurate response likely

When it comes to retaliation for U.S. sanctions on China, “usually, they work very hard to try to find things that won't hurt them and will hurt us,” said William Reinsch, who holds the Scholl Chair in International Business at the Center for Strategic and International Studies.

“They also usually do something that's commensurate, on the same scale as whatever it is that we've done,” Reinsch told VOA. “Apparently, what we've done affects $18 billion worth of [imports], which is not a big number. So, don’t expect a big number back from them, either.”

In the near term, Reinsch agreed that the new tariffs’ impact on China were not likely to be economically significant.

“I think it's more of a political problem,” he said. “It's annoying. It's an embarrassment. The immediate economic impact won't be great. Longer term, however, if their ambition was to sell boatloads of EVs here, like we anticipate them doing in Europe, this will probably put a stop to that.”

Mixed US reaction

In Washington, reaction to the tariff announcement was mixed. Some China trade hawks, such as Senator Marco Rubio of Florida, called on the Biden administration to go even further, by expanding the tariffs on vehicles to include cars with standard combustion engines as well.

In a letter to Biden, Rubio wrote, “It is imperative that any updated tariff regime adequately address the extinction-level threat that Chinese vehicles - both internal combustion engine and electric - pose to American automakers and the workers they employ.”

However, organizations seeking to expand trade between the U.S. and China were less than pleased by the announcement.

“While today’s announcement was not unexpected, we are disappointed with the outcome because maintenance of the prior tariffs - with no reductions - and imposition of additional tariffs ultimately make it harder for American companies to compete in the U.S. and abroad, cost American jobs, and increase prices for U.S. manufacturers and consumers during a time of ongoing inflation,” U.S.-China Business Council President Craig Allen said in a statement.

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