Crackdown on China. As of Friday, September 27, the US will increase customs duties on a range of Chinese products, including electric vehicles (+100%), lithium batteries (+25%), photovoltaic cells (+50%), as well as steel and aluminum (+25 %). Others are planned for 2025, which will include semiconductors (+50%) and in 2026, on graphite (+25 %), a mineral much sought after for its electrical conductivity. In May, US President Joe Biden justified the tariff hikes in response to China’s “unfair trade practices concerning technology transfer, intellectual property and innovation and he also accused it of “flooding global markets with its artificially low-priced exports.”
The targeted products mostly concern the energy transition industry, which the Democratic administration is seeking to develop in the US thanks to its massive program of subsidies and tax credits: the Inflation Reduction Act (IRA), introduced in 2022. President Biden has not only retained the tariffs implemented in 2018 by his Republican predecessor, Donald Trump, but has also increased them, albeit to a lesser extent. In the run-up to the November 5 presidential election, Trump has claimed that the “tariffs are the greatest thing ever invented.”
The gains from the current trade war are essentially political. So far, it has mainly fueled inflation in the US and according to Oxford Economics has reduced the gross domestic product growth by 0.2 to 0.4 percentage points. Despite the country cutting back its volume of imports from China by 18% between 2017 and 2023, the tariff barriers have not reduced the trade deficit, which rose from $621 billion to $773 billion (€557 billion to €694 billion) between 2018 and 2023.
Effect of economic conditions
And the drop in trade between the two powers is actually deceptive. Chinese products enter the US mainly via third countries, such as Mexico, which in 2023 replaced China to become America’s leading trade partner. If elected in November, Trump has promised to impose a 200% tariff on Chinese vehicles entering the country from Mexico. According to Bloomberg, the Biden administration would like to ban the sale of vehicles equipped with Russian and Chinese technology in the name of “national security,” which would effectively close the door on Chinese brands, wherever they come from. The trade war is far from over.
There is a global trend of protectionism against Chinese trade activism. Emerging countries, particularly in Asia, are also putting up tariff barriers. In July, following protests by workers in Jakarta, Indonesia, the trade minister Zulkifli Hasan introduced tariffs of 200% on Chinese imports of textiles, electronics and clothing. At the same time, Thailand also imposed a 7% VAT on all its imports, at least until December, to protect its industry. Brazil and Chile raised import duties on Chinese steel early in 2024.
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