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Tariffs termed 'unfortunate shift' in policy

Experts, trade organizations criticize US' latest move toward protectionism

The United States government's latest protectionist move of slapping heavy tariffs on Chinese imports, including electric vehicles and solar cells, will ultimately harm US competitiveness and hurt US consumers and manufacturers, according to experts, officials and trade groups.

Erica York, a senior economist and research director at the Tax Foundation's Center for Federal Tax Policy, said on Tuesday that the new tariffs represent an "unfortunate shift" in US policy.

The White House said on Tuesday that the US is increasing tariffs on $18 billion worth of Chinese imports, targeting electric vehicles, advanced batteries, steel and critical minerals.

The fresh levies come on top of the already massive tariffs introduced by the administration of former president Donald Trump on more than $300 billion worth of Chinese goods, according to the results of a four-year review of the Section 301 tariffs released by the Office of the United States Trade Representative on Tuesday.

The review was conducted under Section 301 of the Trade Act of 1974, which Trump invoked to launch the tariffs on Chinese goods in 2018.

The centerpiece of the new tariffs is a quadrupling of levies on Chinese electric vehicles to 100 percent starting this year, which analysts said would likely thwart the Joe Biden administration's efforts to fight climate change by speeding up EV adoption.

York said that consumers are not likely to see an immediate increase in costs, because Chinese EVs are already locked out of the US market.

"Longer term, though, it means American consumers will lack choices, including competitively priced and innovative Chinese EVs, and face higher prices for green tech and green energy at home," she told China Daily on Tuesday.

York's organization has estimated that the current tariffs and countermeasures will reduce US output in the long run by about 0.25 percent, costing thousands of jobs and reducing incomes.

Maintaining the current tariffs and doubling down on the approach will further increase costs, insulate US businesses from competitive pressures that lead to improvements in the long run, and put US manufacturers at a competitive disadvantage abroad, according to York.

"Protectionism and industrial policy are not a recipe for success; instead, policymakers should pursue reforms that encourage investment, innovation and competition," she added.

The tariffs that take effect this year also cover solar cells, syringes and needles, and steel and aluminum products, according to a statement from the Office of the United States Trade Representative.

The tariff rate on semiconductors will surge from 25 percent to 50 percent by next year, while levies on Chinese EV batteries and battery parts will more than triple to 25 percent by 2026.

Gary Hufbauer, a senior fellow and trade expert at the Peterson Institute for International Economics in Washington, said that as some tariffs are to be phased in over a couple of years, they won't have an immediate effect.

"But for sure they will delay the rate of EV adoption and hurt the clean-air agenda," Hufbauer said of Biden's climate agenda, which includes ramping up the adoption of EVs.

Foreign Minister Wang Yi said on Wednesday that the frequent imposition of unilateral sanctions by the US and its abuse of the Section 301 investigation process to suppress China's normal trade and economic activities are typical of US bullying behavior.

Wang said that Washington's resorting to all means in order to unscrupulously suppress China does not prove its strength, but rather exposes a lack of confidence.

The World Trade Organization has concluded that the US Section 301 tariffs are violations of the WTO's rules and international law.

Wang said that international businesspeople with basic common sense hold the view that the US actions harm others without benefiting the US itself.

Foreign Ministry spokesman Wang Wenbin said on Wednesday that the tariff increases are another mistake that Washington has made after continuously politicizing economic and trade issues.

The spokesman cited a report from rating agency Moody's Investors Service saying that US importers absorbed more than 90 percent of the additional costs caused by the increased US tariffs on Chinese goods.

"We urge the US side to abide by the WTO rules and immediately withdraw its tariff increases. We will do everything we can to safeguard our interests and rights," he added.

Douglas H. Paal, a distinguished fellow at the Asia Program at the Carnegie Endowment for International Peace, told China Daily that "when leaders are weak in election years, they resort to popular measures that may be less effective in reality than in rhetoric. That is where we are."

Hours after the results of the Section 301 tariffs review were announced, US trade organizations said they were highly disappointed.

"The decision to extend Section 301 tariffs on a wide range of apparel, footwear, accessories and textiles — while not unexpected — is a real blow to American consumers and manufacturers alike," said Steve Lamar, president and chief executive officer of the American Apparel& Footwear Association.

The National Retail Federation said it was "extremely disappointed" that the US had chosen "to double down on a failed and inflationary strategy by sustaining and expanding the Section 301 China tariffs".

The US-China Business Council said that continuation of the earlier tariffs and the imposition of new tariffs will ultimately make it harder for companies in the US to compete at home and abroad.

Source:China Daily / 2024-05 / 16 /Page001
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