Washington Warns Chinese Communist Party to Impose Tariffs on Products

In early this month, United States Secretary of the Treasury Janet Yellen traveled to Beijing for talks with senior Chinese officials. As a representative of the Biden administration, her goal was to thwart China’s efforts to dominate the global green energy products market, particularly in the manufacturing of electric vehicles (EVs).

Most recently, China lodged a complaint with the World Trade Organization (WTO) against Washington’s subsidies for green energy products under the US Inflation Reduction Act (IRA, 2022), making the issue even more complicated. As a counter to China’s complaint, Secretary Yellen demanded that the Chinese government restrain its global ambitions in this area, warning of potential tariffs on Chinese-made electric vehicles, batteries, and other EV components. Given the low likelihood of China acquiescing to her demands, imposing tariffs seems inevitable.

The attitude within the Biden administration has undergone significant changes in the past few years. President Joe Biden, upon entering the White House, had harshly criticized his predecessor Donald Trump’s punitive tariffs on Chinese imports. Secretary Yellen has shown particular concern about the trade restrictions implied in these tariffs. However, in a relatively short period of time, the Biden administration came to embrace Trump’s tariff measures. US Trade Representative Katherine Chi Tai described these measures as the best way to exert pressure on China, compelling them to relax certain restrictive trade practices such as patents, copyrights, and the unconventional demand for American and other foreign companies operating in China to share technology and trade secrets with Chinese partners.

This sets the stage for the early days of the Biden administration. Over the past year to year and a half, Washington has intensified its pressure on China, including countering China’s complaint to the WTO about US subsidies, restricting the export of advanced semiconductors and semiconductor manufacturing equipment to China, and limiting US technology investments in China.

Now, following the tariffs imposed by the Trump administration on Chinese electric vehicles in 2018 and 2019, there is a possibility of additional tariffs on EVs. Meanwhile, the US Congress is considering legislation to ban TikTok from entering the US or compel China to divest ownership of the company’s US operations.

The voluntary restraints proposed by Secretary Yellen are unlikely to gain support from Beijing’s top leadership. Chinese President Xi Jinping and Premier Li Keqiang have made China’s dominant position in electric vehicle manufacturing a cornerstone of their economic plans, which also includes leadership in areas such as artificial intelligence, materials (especially rare earth elements), and hydrogen energy. They have articulated these goals in a very high-profile manner to government officials and the Chinese people, most recently during the annual National People’s Congress and Chinese People’s Political Consultative Conference. Succumbing to Secretary Yellen’s demands would not only disrupt China’s established economic strategies but also undermine Xi Jinping’s authority domestically within the CPC – a development which could be more significant.

Even if China rejects the voluntary restraint requests from the US, Washington could resort to threatening severe tariff measures. The Biden administration has previously shown some hesitancy in the face of economic and diplomatic threats. However, this time may be different. Getting Congress to pass such legislation would require minimal effort from the White House, and Congress has displayed a significant anti-China sentiment. This tariff action would align with the EU’s plans to impose tariffs on Chinese-made electric vehicles, given the EU’s complaints about China unfairly subsidizing EVs flooding the European market. If Europe takes action while the US refrains from imposing tariffs, the North American market would become a vulnerable target for Chinese sales.

The Biden administration’s move to impose tariffs on China also carries political motivations. With Republican presidential candidate and former President Donald Trump promising to impose tariffs on China if he wins the upcoming November election, Biden’s new tariffs aim to diminish the issue of Chinese product sales during the election.

Given these considerations, China may opt for making commitments to Secretary Yellen to forestall tariff hikes, even if Xi Jinping and the top Chinese leadership have no intention of abiding by these commitments. China has employed such deceptive tactics in the past, leaving a discernible pattern. Regardless of the wisdom of this strategy, such disingenuous behavior would tarnish China’s international image, especially at a time when Xi Jinping needs to continue projecting an image of a competent leader externally, potentially forcing Washington down the path of imposing tariffs on Chinese electric vehicles.

This article originally appeared in Epoch Times English edition.