The competition is considered totally “unfair” by Washington. The White House announced on Tuesday, May 14, a marked increase in customs duties applied to the equivalent of $18 billion in Chinese products, in order to “protect American businesses and workers.”
These new customs duties concern nearly ten industrial sectors considered “strategic”, such as semiconductors, critical minerals, medical products or even electric vehicles, the latter for example seeing their customs duties pass from 25% to 100%.
The day before, the American Secretary of the Treasury, Janet Yellen, had stressed the need for the White House to “ensure that the stimulus provided by the IRA (the big green plan passed a year ago, Editor’s note) to support these industries, that these investments be protected.”
Accelerate the production of electric cars
The American government has in fact invested more than 860 billion dollars, via the IRA, in order to accelerate the production of electric cars, vehicle batteries but also solar panels or wind turbines “made in America”. But Washington accuses Beijing of strongly supporting its industries in these sectors considered strategic, with significant subsidies which lead to overproduction that Chinese companies sell on the world market by cutting prices, thereby preventing the development of competing industries in other countries.
A fear shared by the European Union and other countries, such as Turkey, Brazil or India, underlined an American official during a telephone press conference.
These customs duties therefore aim to “eliminate unfair trade practices, whether concerning technology transfer, intellectual property or innovation”, justified the White House in its press release.
Beyond the quadrupling on electric vehicles, Washington is increasing those targeting steel and aluminum from 7.5% to 25%, just as for batteries, and those for semiconductors from 25% to 50% , now also applied to solar panels and certain medical products. The director of the National Economic Council attached to the White House, Lael Brainard, justified these choices by the fact that China “finances its growth at the expense of others”.
“As a result of its unfair practices, China will have a production capacity for solar panels that will be more than twice the anticipated global demand in the short term,” added Lael Brainard.
“Protect the industry”
In a note, economists at Oxford Economics estimated that these measures were “more symbolic than anything else”, from the point of view of the American economy, and “will not have a notable impact on American inflation or GDP, according to our models.
But these customs duties can “strengthen the tools available to the government to accelerate the relocation or + friendshoring + (the installation in geographically or ideologically close countries, editor’s note) of the production of sectors considered strategic”, he added. judged side Emily Benson, researcher for the CSIS, interviewed by AFP.
“This is a signal to American manufacturers that the Biden administration is seeking to protect the industry against Chinese electric vehicles,” Paul Triolo, a researcher specializing in China for Albright Stonebridge Group, told AFP.
But the real impact for American groups could concern customs duties applied to batteries and supply chains, “due to the domination of Chinese companies” in these sectors,” he added.
The decision comes amid a review of the Section 301 investigation, a tool used by former President Donald Trump to impose additional tariffs on the equivalent of $300 billion in Chinese products imported to the United States. When he came to power, President Joe Biden announced that his administration would review these customs duties to determine whether they should continue or not.
An American official, however, stressed that all customs duties were maintained, to which must be added the 18 billion dollars announced on Tuesday.
The United States, however, minimizes the risk of a Chinese response, Janet Yellen deeming it “possible” but betting that China will take into account the aspect “targeted at our concerns and not broad”. Chinese overproduction is also a subject on which Washington has regularly expressed its concerns, with Janet Yellen addressing the subject again during her last visit to China at the beginning of April.