US-China trade war: Biden's new tariff policy to harm American consumers
Editor's note: Executive Director of the Institute for Strategic Cooperation between China and Russia at Tsinghua University Wang Qi. The article reflects the author's opinions and not necessarily the views of News.Az.
Secretary of the Treasury Janet Yellen has supported Biden’s decision. "We cannot allow our emerging industries, which we aim to support, to be undermined by China's actions," she stated. Yellen also emphasized that the new tariffs will help protect the development of American sectors and strengthen their supply chains.
However, contrary to Washington's expectations, the trade war with China will primarily affect ordinary Americans. The tariffs will ultimately be paid by consumers. Although few Chinese electric vehicles are sold in the United States, minimizing the immediate impact of the tariffs on American consumers, the deep integration of global supply chains means that the US market will inevitably suffer from price increases.
The United States already imports a significant amount of materials from China for its own production of electric vehicles. According to the US Department of Transportation, American electric vehicle brands, including Tesla and Ford Mustang, contain from 30 to 51 percent of Chinese components. “From batteries to mining and technology integration, the Chinese supply chain is leading and the best,” Reuters quotes Stella Li, CEO of BYD Americas, as saying.
Closing the doors to high-quality and cost-effective materials from China will inevitably lead to increased production costs for electric vehicles, batteries, and other equipment in the United States. Thus, Biden’s tariff increases against China actually strike at American firms that rely on Chinese materials, with the final price being paid by American consumers.
The Biden administration aims to protect American industry, but suppressing competitors does not make American electric vehicles more competitive on the global market. “If General Motors, Ford, and Stellantis do not have to compete with foreign companies producing electric vehicles, they will not produce them. And Americans will lose market share, as happened in the 1970s,” Daniel Becker from the Centre for Biological Diversity told Reuters. Moreover, the tariff increases make it difficult for American companies to compete both in the US and abroad. “We are disappointed with the outcome, as maintaining previous tariffs and introducing additional ones make it difficult for American companies to compete in the US and abroad,” Craig Allen, president of the US-China Business Council, told The Financial Times.
Biden's sharp increase in tariffs is likely to provoke retaliatory measures from China. The Chinese Foreign Ministry has stated that it will take all necessary measures to protect its legitimate rights and interests. While there will be no winners in the tariff war, Washington will suffer more from this confrontation. According to official data, in 2021, the US exported more than 155,000 passenger cars and light trucks to China, more than double the number sent by China to the US in the same year. According to data from the Washington-based Centre for Strategic and International Studies, only 2 percent of US electric vehicle imports come from China. This means that China's countermeasures could seriously harm American companies seeking to export their products to the Chinese market.
If the Biden administration truly aims to protect American jobs, it should do the opposite: cooperate with China to restore domestic manufacturing capacity. Former President Donald Trump made a mistake by starting a trade war against China; Biden should avoid exacerbating this mistake.
Investments in the development of technology and infrastructure could enhance the competitiveness of American enterprises. Joint efforts with China in research and development could lead to the creation of new jobs and the strengthening of the US economy. This approach would not only reduce production costs but also ensure long-term growth and stability for American industry.
Therefore, the introduction of new tariffs on Chinese imports may cause more harm than good to the US economy. Instead, strategic partnership and investment in innovation are required to ensure the sustainable development and competitiveness of American industries on the global market. The trade war with China, while appearing to protect national interests, in practice, may result in negative consequences for the US domestic market and increase dependence on more expensive and less efficient alternative sources of materials and components.
American consumers, already suffering from high inflation, will face further price increases for cars, electronics, and other goods, as manufacturers will be forced to pass on the additional costs to end buyers. This could lead to a decrease in purchasing power and a slowdown in economic growth.
Rather than escalating confrontation with China, the United States could seize the opportunity to improve bilateral relations and joint development. This would not only avoid negative economic consequences but also create a solid foundation for mutually beneficial cooperation in the future. Joint projects in technology, green energy, and other promising sectors could provide a powerful boost to the economies of both countries and contribute to global stability and prosperity.
In conclusion, the protectionist policies pursued by the Biden administration require reassessment. Strategic partnership with China and investments in innovation and infrastructure could become key factors in ensuring the competitiveness and sustainable development of the American economy. Only through cooperation and mutual understanding can true prosperity and well-being be achieved for both countries.
(If you possess specialized knowledge and wish to contribute, please reach out to us at opinions@news.az).
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