New Tariffs On China Goods

This week, President Joe Biden placed additional tariffs on selected imports from China, including electric vehicles, solar panels and steel. 

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

The Chinese Foreign Ministry argued that the tariffs will only hurt American consumers.

Wang Wenbin, Chinese Foreign Ministry: “The U.S. keeps politicizing trade and economic issues and further increased tariffs against China, which is doubling its fault. It will only significantly push up the cost of imported goods, causing American businesses and consumers to bear more losses and making American consumers pay a greater price.”

The trade tiff dates back to the Trump Administration, which placed tariffs on almost the entire list of goods imported from China. The Chinese responded with tariff hikes on American agricultural products, which reduced purchases and caused grain prices to fall. Sales to China plummeted from $19 billion in 2017 to just $9 billion the following year. The Trump USDA later provided over $25 billion in Market Facilitation Payments to maintain profitability for farmers who lost income due to the tariff war.

Iowa Senator Charles Grassley, a Republican and critic of the Trump Administration’s use of tariffs, is concerned about the new round of trade duties.

Sen. Charles Grassley, R, Iowa: “I remember what happened when Trump did it, there was retaliation against American agricultural products, and I don’t want that to happen again. I think there are ways that you can fight unfair trade agreements, and that is with countervailing duties that you put on in a country receiving subsidized products by the foreign government to offset that dollar-for-dollar, and that is what we should do as opposed to putting tariffs on. I think it just leads to a tariff war.”

Trade policy pundits believe China and the U.S. have already begun decoupling their economies, seeking trade partners in other parts of the world. This new round of tariffs may be another chapter in continued distancing between the two countries.

00:01:21:20 - 00:01:53:10 Tu Xinquan University of International Business and Economics, Beijing: “However, the problem is there's a kind of dilemma that the better China prepares for decoupling, U.S. decoupling with China, the more decoupling will be happening… And so now I think that this will be a kind of unavoidably a downward spiral, of a vicious cycle. So on the U.S. side, as I said, we can also see the ever upgrading and expanding decoupling actions such as raising the tariffs and stricter export control. And it seems that it's comfortable. I see. Still, it's always going on, going deeper. So I'm afraid that we have to we'll have to live with this a long time.”

For Market to Market, I’m Peter Tubbs.