US-China Ties Strained as Beijing Threatens Retaliation, EU Considering Similar Measures.
US President Joe Biden announced significant tariff increases on Chinese imports of green tech, including electric vehicles, chips, and solar cells.
The tariffs aim to impact around $18 billion worth of imports, but analysts predict minimal economic consequences if China does not retaliate.
Economist Ryan Sweet of Oxford Economics stated that the tariffs would not significantly affect US inflation or GDP. Previously, Chinese electric vehicles were subject to tariffs, causing some automakers to avoid the US market.
In 2021, China exported approximately $400 million in battery electric vehicles to the US, while the European Union exported nearly $7.5 billion.
Oxford Economics assumes China will not retaliate significantly due to current economic weaknesses.
Tianlei Huang, a research fellow at the Peterson Institute for International Economics, stated that while tariffs may negatively impact some Chinese companies' sales and profitability, the direct effect is limited and serves more as a signal.
The Center for Strategic and International Studies (CSIS) found that more restrictive trade policies could make low-carbon technologies less competitive against combustion engine vehicles.
However, the falling costs of clean energy still outweigh the rising trade frictions, according to CSIS research.
The Inflation Reduction Act in the US, which supports the green transition, will also encourage the creation of domestic content.
China has warned of retaliation in response to these trade policies.
Beijing has threatened to take action in response to the US's perceived economic suppression.
The Trivium China policy analysis group suggests China may target industries in US swing states to impact the election or opt for symbolic retaliation.
Beijing-based economist Mei Xinyu expects a targeted response, and analysts do not anticipate a tit-for-tat response.
Previously, China announced export controls on rare metals essential for semiconductor manufacturing, making action on critical minerals a possibility.
The US is not importing Chinese electric vehicles (EVs), but Tesla continues to thrive in the Chinese market with support from Beijing and Shanghai.
The European Union (EU) is investigating Chinese electric car subsidies, fearing a threat to its auto industry, which could lead to a tariff hike from the current 10 percent.
Germany and Sweden have expressed reservations about new European tariffs on Chinese EVs, but if multiple major economies adopt a tariff approach, China may be concerned from both an economic and propaganda standpoint.
Biden's tariff move on Chinese EVs may accelerate EU action.
The US imposing tariffs on Chinese imports could lead Europe to implement their own tariffs or accept an influx of Chinese products, according to Joseph Webster, a senior fellow at the Atlantic Council.
This is due to the potential diversion of trade from the US to Europe.
The latest tariffs were expected by China, but analysts note that the underlying issues between the US and China remain unresolved, and both sides' behaviors have not changed.
This new development further erodes the already thin stability in US-China relations.
Economist Ryan Sweet of Oxford Economics stated that the tariffs would not significantly affect US inflation or GDP. Previously, Chinese electric vehicles were subject to tariffs, causing some automakers to avoid the US market.
In 2021, China exported approximately $400 million in battery electric vehicles to the US, while the European Union exported nearly $7.5 billion.
Oxford Economics assumes China will not retaliate significantly due to current economic weaknesses.
Tianlei Huang, a research fellow at the Peterson Institute for International Economics, stated that while tariffs may negatively impact some Chinese companies' sales and profitability, the direct effect is limited and serves more as a signal.
The Center for Strategic and International Studies (CSIS) found that more restrictive trade policies could make low-carbon technologies less competitive against combustion engine vehicles.
However, the falling costs of clean energy still outweigh the rising trade frictions, according to CSIS research.
The Inflation Reduction Act in the US, which supports the green transition, will also encourage the creation of domestic content.
China has warned of retaliation in response to these trade policies.
Beijing has threatened to take action in response to the US's perceived economic suppression.
The Trivium China policy analysis group suggests China may target industries in US swing states to impact the election or opt for symbolic retaliation.
Beijing-based economist Mei Xinyu expects a targeted response, and analysts do not anticipate a tit-for-tat response.
Previously, China announced export controls on rare metals essential for semiconductor manufacturing, making action on critical minerals a possibility.
The US is not importing Chinese electric vehicles (EVs), but Tesla continues to thrive in the Chinese market with support from Beijing and Shanghai.
The European Union (EU) is investigating Chinese electric car subsidies, fearing a threat to its auto industry, which could lead to a tariff hike from the current 10 percent.
Germany and Sweden have expressed reservations about new European tariffs on Chinese EVs, but if multiple major economies adopt a tariff approach, China may be concerned from both an economic and propaganda standpoint.
Biden's tariff move on Chinese EVs may accelerate EU action.
The US imposing tariffs on Chinese imports could lead Europe to implement their own tariffs or accept an influx of Chinese products, according to Joseph Webster, a senior fellow at the Atlantic Council.
This is due to the potential diversion of trade from the US to Europe.
The latest tariffs were expected by China, but analysts note that the underlying issues between the US and China remain unresolved, and both sides' behaviors have not changed.
This new development further erodes the already thin stability in US-China relations.
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Translated by AI
